Also known as: marketable title · marketability · marketable title doctrine
Written by attorneys · grounded in primary & secondary sources — see below
Title that is free from reasonable doubt and that a reasonably prudent purchaser, with full knowledge of the facts, would accept. The seller under a contract for the sale of land generally has a duty to convey marketable title at closing. Title defects that may render title unmarketable include unreleased liens, breaks in the chain of title, outstanding interests such as easements or covenants, and litigation that clouds title.
Dusk Plastics contracted to buy an aging factory from Allied Production for $4.8 million. A title search revealed a recorded 1975 option allowing a long-departed tenant to repurchase part of the property. Dusk refused to close because the option created reasonable doubt that a prudent purchaser would not accept. Allied sued for specific performance, but the court permitted rescission.
Meridian Motors agreed to sell a warehouse to Marathon Logistics. A recorded but unreleased supplier lien remained on the title at the scheduled closing date. Marathon refused performance because the lien created an outstanding claim that prevented marketable title. The contract allowed a cure period, but the seller could not remove the defect in time.
Select any source to read its text and confirm it supports the definition.
Magnolia Foods contracted to purchase a retail site from Matrix Technologies. The contract required marketable title, yet the seller tendered a commitment insuring over an unused easement at standard rates. Magnolia rejected the tender because the easement still created doubt a prudent buyer would not accept. The court held that insurable title did not satisfy the marketable-title obligation.
Mason McCarthy contracted to buy a commercial lot from Megan Moore. A recorded judgment lien against the seller remained unsatisfied at closing. McCarthy refused to proceed because the lien constituted a title defect that rendered the title unmarketable. Moore could not cure the lien before the contract deadline.
Mariam Mansour agreed to purchase a historic building from Mohan Malhotra. A pending copyright infringement suit against a prior owner clouded the chain of title. Mansour declined to close because the litigation created reasonable doubt that a prudent purchaser would accept. The seller could not resolve the suit before the closing date.
Melanie Morris contracted to buy undeveloped acreage from Marco Marquez. A lawsuit challenging the current zoning clouded the title. Morris refused to close because the pending litigation created reasonable doubt that a prudent purchaser would accept. Marquez could not obtain a dismissal before the contract deadline.
Unreleased liens, breaks in the chain of title, outstanding interests such as easements or covenants, and pending litigation that clouds title each create reasonable doubt that a prudent purchaser would not accept.
Supporting sources
No. When the contract expressly demands marketable title, a seller's tender of insurable title does not satisfy the obligation because the two standards are distinct and the buyer bargained for the stricter marketable-title requirement.
Supporting sources
A buyer may refuse to close and may rescind or recover damages when the seller cannot cure the defect by the closing date and the contract does not provide otherwise or waive the defect.
Supporting sources
A recorded option that remains of record creates an outstanding adverse claim. Because a prudent purchaser would face reasonable doubt whether the option holder might surface and exercise rights, the title is unmarketable.
Supporting sources
…of the bill is that the ordinance of its own force operates greatly to reduce the value of appellee’s lands and destroy their marketability for industrial, commercial and residential uses; and the attack is directed, not against any specific provision or provisions, but against the ordinance as an entirety. Assuming the…