Legal Definitions - merchantable title

Merchantable title refers to a legal term that describes a title to a property that is free from any defects or claims that could affect the ownership or use of the property. It is a title that a reasonable buyer would accept because it appears to lack any defect and to cover the entire property that the seller has purported to sell. It enables a purchaser to hold property in peace during the period of ownership and to have it accepted by a later purchaser who employs the same standards of acceptability.

For example, if a person wants to sell their house, they must provide a merchantable title to the buyer. This means that the seller must prove that they have the legal right to sell the property and that there are no liens, encumbrances, or other claims against the property that could affect the buyer's ownership or use of the property.

Another example is when a person buys a car from a dealership. The dealership must provide a merchantable title to the buyer, which proves that they have the legal right to sell the car and that there are no outstanding liens or claims against the car that could affect the buyer's ownership or use of the car.