What is “Marketable Title”? How to make sure there are no clouds on title

What is “Marketable Title”? How to make sure there are no clouds on title

 

“Marketable Title” is essentially the condition of the title and the ability to convey or transfer the property or land to a potential buyer without any liens or encumbrances (that would in essence “Cloud” the title).

Most importantly the ownership and possession of real property that is readily transferable as is free from any potential and valid claims or defects by outside parties. If a property does not have current, legitimate title insurance and there is a defect in the chain of title, the defect or “Cloud” must be cured before a seller can convey and transfer said marketable title.  If there is a current policy in place, rather than curing the defect, (which can be very expensive and time consuming), the current title insurance company can elect to insure against any issues that the defect may have caused or cause in the future.  In other words, the insurance company agrees to repair the issue only when or if it ever becomes an immediate problem.  In some cases title defects in the chain of title may never become an issue or threaten the value or ownership of the real estate or land.

Title insurance companies in the business of mitigating risk, and whenever possible they would rather defer the risk as opposed to paying to address the issue or even correct it.

For more information on performing a title search to ensure Marketable Title see:

What is a Title Search and what is involved in a Title Search | Part 1

What is a Title Search | What is involved | Why it is critical