What does "marketable title" refer to?

Marketable title refers to a title that can be legally sold or mortgaged without any significant encumbrances or defects that would hinder the transaction. It signifies that the title is clear and free from clouds, meaning that there are no unresolved issues that could affect the ownership rights of the property in question. This is crucial for buyers and lenders, as they want assurance that they are acquiring a property with unencumbered rights, making it viable for sale or financing in the future.

When a title is described as marketable, it implies that there are no legal obstacles that would prevent a reasonable buyer from purchasing the property or a lender from financing it. The existence of a marketable title is often a requirement for closing real estate transactions, as it protects the interests of all parties involved. In contrast, titles that must be insured, have significant defects, or require additional legal review do not meet the standard of being marketable and would typically deter potential buyers or lenders.