Marketable Title
Title that is free from reasonable doubt as to who the owner is and free from material liens or encumbrances. Marketable title can be sold or mortgaged without significant risk of legal challenges.
Understanding Marketable Title
Marketable title is the standard expected in real estate transactions. It's title that a prudent buyer would accept and a title company would insure without special exceptions. While no title is perfectly free from all possible claims, marketable title is free from 'reasonable doubt.'
Title is considered unmarketable if there are: breaks in the chain of ownership, outstanding liens that would survive transfer, unresolved boundary disputes, easements that materially impair value, deed restrictions that weren't disclosed, or other defects a reasonable buyer would object to.
Marketability is somewhat subjective—what one buyer (or title company) accepts, another might reject. However, objective standards exist: clear chain of title, no outstanding monetary liens, no undisclosed encumbrances, and property matches the legal description.
For curative title investors, creating marketable title from unmarketable title is the core business model. Properties with title issues can be acquired cheaply. The 'curative' work—clearing liens, resolving heir claims, filing quiet title actions—transforms unmarketable title into marketable title, creating value in the process.
Real-World Example
A contract requires the seller to deliver 'marketable title' at closing. The title search reveals an old judgment lien from a company that no longer exists. The seller must either obtain a release, post a bond, or get the title company to insure over the lien before title can be considered marketable.
Texas-Specific Information
Texas contracts typically require 'good and marketable title' or 'good and indefeasible title.' The Texas Real Estate Commission's standard contract forms define title requirements and provide mechanisms for resolving title objections. What constitutes marketable title in Texas is ultimately determined by what title insurance companies will insure without unacceptable exceptions.
Related Terms
Clouded Title
A title with unresolved claims, liens, or defects that cast doubt on the true ownership of property. Clouded titles prevent sales, refinancing, and title insurance until the issues are resolved.
Title Insurance
An insurance policy protecting property owners and lenders against financial loss from defects in title. Unlike other insurance that covers future events, title insurance protects against past events that affect current ownership.
Chain of Title
The chronological sequence of historical transfers of title to a property, from the original grant to the current owner. A complete chain establishes ownership through an unbroken series of conveyances.
Quiet Title Action
A lawsuit filed to establish clear ownership of real property and remove any clouds on the title. The court judgment eliminates competing claims and establishes the plaintiff as the rightful owner.
Track Deals Involving Marketable Title
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