Legal Definitions - Marketable Title

Marketable title refers to a title that is free from any doubts or threats of legal action. When a seller sells land to a buyer, they promise to provide a marketable title to the buyer at the closing date. A title to a piece of land is considered unmarketable if there are any encumbrances on the land, such as mortgages, unless the buyer agrees to them. The title is also unmarketable if the land was obtained through adverse possession or if the land violates any zoning laws.

• John wants to sell his house to Mary. Before the sale, John must ensure that the title to the house is marketable, meaning there are no liens or other legal issues that could prevent Mary from owning the property.
• Tom buys a piece of land from Sarah. Sarah promises to provide a marketable title to Tom at the closing date. However, it is later discovered that the land violates zoning laws, making the title unmarketable.

The examples illustrate that a marketable title is essential when buying or selling property. It ensures that the buyer receives clear ownership of the property without any legal issues or disputes. If the title is unmarketable, it can cause problems for both the buyer and the seller, leading to legal disputes and financial losses.