Marketable title ( real estate) is a title that a

court of equity A court of equity, also known as an equity court or chancery court, is a court authorized to apply principles of Equity (law), equity rather than principles of law to cases brought before it. These courts originated from petitions to the Lord Cha ...

considers to be so free from defect that it will legally force its acceptance by a buyer. Marketable title does not assume that absolute absence of defect, but rather a title that a prudent, educated buyer in the reasonable course of business would accept. For real estate practitioners, the most complete reference to title issues is found in the preprinted wording contained within an agreement/contract. If you cannot produce a clear title of

deed A deed is a legal document that is signed and delivered, especially concerning the ownership of property or legal rights. Specifically, in common law, a deed is any legal instrument in writing which passes, affirms or confirms an interest, right ...

to the property then the prospective buyer should expect to lose in a

specific performance Specific performance is an equitable remedy in the law of contract, in which a court issues an order requiring a party to perform a specific act, such as to complete performance of a contract. It is typically available in the sale of land law, b ...

action. Merchantable title and marketable title are synonymous terms. In the absence of an agreement to the contrary, there is an implied undertaking in the

contract A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves consent to transfer of goods, services, money, or promise to transfer any of thos ...

that the vendor (person selling the property) has a marketable title. The contract typically provides that on failure of a vendor to deliver good and marketable title, the vendee (buyer) may rescind the contract and recover any deposit.

Merger

If a deed is delivered and it has no warranty of title, the buyer has no recourse because the deed supersedes the contract. This means that the initial

is no longer in effect.

Closing date

Sellers only have to tender good and marketable title on the date the conveyance is executed (date of closing). So a seller may contract to sell property it does not currently possess. Liability will be imposed on the seller for breach only if the seller does not have good and marketable title on the date of closing.

Defects that make title unmarketable

# Outstanding mortgages/liens # Restrictive covenants # Outstanding future interests of others in the property, i.e. a " reverter". # Encumbrances # Easements on the property # Variations in the names of grantors and grantees # Variations in the chain of title # Outstanding

dower Dower is a provision accorded traditionally by a husband or his family, to a wife for her support should she become widowed. It was settlement (law), settled on the bride (being given into trust instrument, trust) by agreement at the time of t ...

interests. #

Adverse possession Adverse possession in common law, and the related civil law (legal system), civil law concept of usucaption (also ''acquisitive prescription'' or ''prescriptive acquisition''), are legal mechanisms under which a person who does not have title (p ...

claims # Structural encroachments # Existing violations of an equitable servitude or covenant # Zoning restriction violations

Actions that do not defeat marketability

# Zoning restrictions (so long as there are no current violations of the restrictions) # Other land use regulations Real property law {{law-term-stub