Real Estate Law In Plain English: What Is "Marketable Title"?

<h1>Real Estate Law In Plain English: What Is "Marketable Title"?</h1>Author: <a title="Bob Miles" href="http://www.articlesbase.com/authors/bob-miles/20807.htm">Bob Miles</a> Marketable title (sometimes called "merchantable title") is of much greater concern for the sale of real estate than with the same of personal property, mainly because of the complex and sometimes arcane rules applicable to real property. Property law recognizes a myriad of interests and procedures in real estate including easements, future interests, leaseholds, mortgages, and adverse possession, among others. For this reason it is quite likely that the interests in a given parcel of land will be in dispute - the bank claims a mortgage over the real estate that was taken out by the previous owner, the city claims the right to build a road across your land (an easement), etc. Even if these claims are in fact invalid, the very fact that there is enough credibility to them to force them into court to resolve them could make your land quite difficult to sell. The absence of credible or serious claims against your full possession and quiet enjoyment of the land (that you can then sell to a potential buyer) is what is known as "marketable title". 
 
On the other hand, if the claims against your title are substantial enough to make a reasonable buyer think twice before agreeing to purchase your property at anywhere near the going market price, then your title is unmarketable. The consequence of this is that if the buyer finds out that your title is unmarketable after signing a real estate sales contract with you, he can refuse to close the sale until you clear up the problem, and there won't be a whole lot you can do about it except either give him what he wants or wave bye-bye to him (and his money!). Furthermore, if the real estate sales contract states that "time is of the essence", then you have until the contractual closing date and not a moment longer to offer the buyer marketable title. 
 
Following are the legal requirements for marketable title: 
 
(1)Seller has actual title to the property in fee simple absolute (the most complete form of real property ownership) 
 
(2)The title is free from encumbrances (mortgages, leaseholds, etc.). If the property has encumbrances, then a clear description of them in the sales contract should close this loophole. 
 
(3) The title is free from reasonable doubt. An examination of title records should reveal that there is no reasonable doubt as to whether the seller actually owns the property and whether or not there are encumbrances upon it that were not disclosed in the real estate sales contract. 
 
DISCLAIMER: The foregoing is intended for reference purposes only and not as legal advice.About the Author: <a href="http://realpropertylaw.blogspot.com"> Real Estate Law in Plain English</a> explains <a href="http://realpropertylaw.blogspot.com/2007/05/how-to-weasel-your-way-around-statute.html">real estate law</a> without the legalese.Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/real-estate-articles/real-estate-law-in-plain-english-what-is-marketable-title-150396.html" title="Real Estate Law In Plain English: What Is "Marketable Title"?">Real Estate Law In Plain English: What Is "Marketable Title"?</a>

Marketable title (sometimes called "merchantable title") is of much greater concern for the sale of real estate than with the same of personal property, mainly because of the complex and sometimes arcane rules applicable to real property. Property law recognizes a myriad of interests and procedures in real estate including easements, future interests, leaseholds, mortgages, and adverse possession, among others. For this reason it is quite likely that the interests in a given parcel of land will be in dispute - the bank claims a mortgage over the real estate that was taken out by the previous owner, the city claims the right to build a road across your land (an easement), etc. Even if these claims are in fact invalid, the very fact that there is enough credibility to them to force them into court to resolve them could make your land quite difficult to sell. The absence of credible or serious claims against your full possession and quiet enjoyment of the land (that you can then sell to a potential buyer) is what is known as "marketable title".

On the other hand, if the claims against your title are substantial enough to make a reasonable buyer think twice before agreeing to purchase your property at anywhere near the going market price, then your title is unmarketable. The consequence of this is that if the buyer finds out that your title is unmarketable after signing a real estate sales contract with you, he can refuse to close the sale until you clear up the problem, and there won't be a whole lot you can do about it except either give him what he wants or wave bye-bye to him (and his money!). Furthermore, if the real estate sales contract states that "time is of the essence", then you have until the contractual closing date and not a moment longer to offer the buyer marketable title.

Following are the legal requirements for marketable title:

(1)Seller has actual title to the property in fee simple absolute (the most complete form of real property ownership)

(2)The title is free from encumbrances (mortgages, leaseholds, etc.). If the property has encumbrances, then a clear description of them in the sales contract should close this loophole.

(3) The title is free from reasonable doubt. An examination of title records should reveal that there is no reasonable doubt as to whether the seller actually owns the property and whether or not there are encumbrances upon it that were not disclosed in the real estate sales contract.

DISCLAIMER: The foregoing is intended for reference purposes only and not as legal advice.

Real Estate Law in Plain English explains real estate law without the legalese.

Rate this Article:

5 / 5 stars - 1 vote(s)

Re-Publish

Article Source: http://www.articlesbase.com/real-estate-articles/real-estate-law-in-plain-english-what-is-marketable-title-150396.html

Article Tags: Real Estate Law, Marketable Title

Related Videos
Related Articles
Ask / Related Q&A

Play

How To Invest In Real Estate

Play

Learn about Selecting a Real Estate Agent

Play

Real Estate Marketing Tips - Part 3

Play

Real Estate Marketing Tips - Part 2

Play

Real Estate Marketing Tips - Part 1

Latest Real Estate Articles
More from Bob Miles

Tulum Real Estate – Live Next to One of the World's Top 10 Beaches

By: Thomas Lloyd | 30/12/2009
Tulum Real Estate is currently in the process of growing from a small village beside some ruins, into thriving real estate market. While the current town is small, and current Tulum MLS listings will show only a hand full of options for homes or condos, there are some excellent options available in the area, especially in the area of land purchases, which currently are currently available in some excellent new developments.

Playa del Carmen Real Estate Sees Efficient Progress on Bridges

By: Thomas Lloyd | 30/12/2009
Playa del Carmen Real Estate buyers will always receive a pleasant welcome from the local population, and will find that many of the locals speak English, and are eager both to practice, and to help out any new comers. In the case that you as a new resident wishes to learn Spanish – although it's definitely not considered an obligation – many locals also are willing to help you with this task.

Playa del Carmen Real Estate Sees Efficient Progress on Bridges

By: Thomas Lloyd | 30/12/2009
Playa del Carmen Real Estate area, the sight you see currently as you approach downtown is closed center lanes of the highway, with several concrete posts finished, and a few more under construction at the main intersection with Juarez Avenue. While the sight isn't very attractive at the moment, it's demonstrates the speed and efficiency that Playa del Carmen Real Estate owners enjoy in infrastructure improvements.

Playa del Carmen Real Estate - White Christmas or Jazz on the Beach?

By: Thomas Lloyd | 30/12/2009
If you've been looking at Playa del Carmen MLS properties, chances are that you're probably dreaming of anything but that; in fact, you probably feel you've had just a few too many white Christmases – mostly because of the cold that goes with it. Now imagine another kind of winter, the kind that Playa del Carmen Real Estate or Cancun Real Estate offer.

Cancun Real Estate Represented at World Travel Market 2009

By: Thomas Lloyd | 30/12/2009
Cancun Real Estate has been a favorite for international property purchasers for enjoying a beachfront lifestyle or a for investment purposes. For Mexico MLS listings, and internationally, Cancun MLS listings have become among the most popular for buyers.

Playa del Carmen Real Estate Receives Further Highway Improvement

By: Thomas Lloyd | 30/12/2009
Playa del Carmen Real Estate owners already enjoy easy access to many other points of the Yucatana Peninsula, with an expressway running from the nearby Cancun (a 45 minute drive to the North) to the peninsula's largest city, Merida. Also a short drive to the south at Tulum, a highway runs to another colonial city, Valladolid, from there connecting to Merida as well. This highway is currently being widened at various points. Travel to both of these beautiful colonial cities is about to get easie

Playa del Carmen Real Estate Benefits from Luxury Tourism

By: Thomas Lloyd | 30/12/2009
Tulum Real Estate area is currently also in the process of growing as luxury beach front property destination, with new developments and high-end land options for real estate buyers looking for comfort and class. In the case of Playa del Carmen, Tulum and the Riviera Maya (the stretch between the two, extending towards Cancun) the luxury of the real estate available is reflected by, and tied into the level of luxury the area's hotel industry offers.

Playa del Carmen Real Estate, Paradise for Weddings and Lifestyle

By: Thomas Lloyd | 30/12/2009
Playa del Carmen Real Estate has been identified by international buyers as one of the ideal choices to buy beachfront property in a warm climate, both in the Mexico Real Estate market, and on a world-wide level. Mexico's beaches, especially Playa del Carmen, and the surrounding Riviera Maya, have been growing as top choice for an interesting branch of tourism, which has a special tie to property purchases – wedding tourism.

Yew Git Off My Property! The Law Of Trespassing

By: Bob Miles | 29/05/2007 | Law
CYA Disclaimer: The following is intended for reference purposes only and not as legal advice. What is "trespassing", anyway? Most of us think we know. But the more you think about it, the more complex it can get. For example, could you be sued for trespassing on property that you are...

Real Property Law: Fixtures

By: Bob Miles | 29/05/2007 | Law
CYA Disclaimer: The following is intended for reference purposes only and not as legal advice. What is a fixture, anyway? Odds are you own one. The formal definition is "a tangible object that was once personal property but has become so connected with real property that it has become a part...

Real Property Law: Nuisances

By: Bob Miles | 29/05/2007 | Law
CYA Disclaimer: The following is intended for reference purposes only and not as legal advice. "He's such a nuisance, constantly drumming his fingers on the table like that!" Just what is a "nuisance", anyway? Well, it has one meaning in common parlance and another more specific meaning in law, although the...

Airspace Over Your Property - How Much Of It Do You Own?

By: Bob Miles | 29/05/2007 | Law
CYA Disclaimer: The following is intended for reference purposes only and not as legal advice. The short answer is, "as much of it as you can use". No, you cannot float a "No Trespassing" blimp and shoot down passing airliners for trespassing. But believe it or not, you can build a...

How Mortgages Work

By: Bob Miles | 28/05/2007 | Real Estate
A mortgage is created when someone uses real estate to secure a promise to repay a debt. For example, if you borrow money from a bank and give the bank permission to sell your house to pay off the debt if you don't pay it back yourself, then you have...

Registering The Purchase Of Your Real Estate

By: Bob Miles | 27/05/2007 | Real Estate
As soon as you buy real estate, it's a must to register it at the recording office or wherever real estate transactions are registered in your particular jurisdiction. If you don't, you could end up losing title to your real estate due to the misconduct of the previous owner or...

Real Estate Law: Damages For Breach Of Warranty Covenants By A Seller

By: Bob Miles | 27/05/2007 | Real Estate
If you own real estate and sell it to a buyer under a general warranty deed, you can be liable to the buyer years later for some defect in the title that you didn't even know about at the time you sold him the real estate, and you could end...