In real estate, the concept of marketability of title refers to ownership. Specifically, a marketable title refers to property that is free from claims, allowing for the transferability of possession of real property. Although a good and marketable title does not assume absolute absence of defect, buyers can expect that their ownership will not be challenged by outside claims if marketability of title is addressed in the contract for sale. Marketable title is not to be confused with marketability of property. Marketability of a property involves the physical state of the property, specifically in the eyes of mortgage lenders.
Involving a lawyer can ensure that you get a good and marketable title to a property. Prior to closing, a lawyer can conduct a thorough title search to determine multiple factors that can affect the marketable title. Specifically, they can determine previous ownership of the property, as well as prior dealings in relation to the property. In addition, a comprehensive title search can reveal any existing mortgages on the property, outstanding taxes, and any utility charges.
In some cases, defects regarding the title of the property are not discovered until after closing. This uncertainty poses as an issue because, if the buyer were to subsequently sell the property, the marketable value can decrease. As well, a buyer may have to remedy the issue, increasing spending costs on the property. The buyer can be exposed to other risks, such as fraudulent conveyance of property to another buyer.
Conversely, the risks caused by defects can be mitigated by title insurance. Title insurance can be issued in favour of the buyer, as well as the mortgage lender. Sometimes, mortgage lenders may require a buyer to purchase title insurance as a condition for the loan.
Depending on the title insurance policy sought out by the buyer, the following risks are generally covered:
- Claims due to fraud, duress, or forgery
- Work orders
- Zoning non-compliance
- Forced removal of existing structures
- Lack of vehicular or pedestrian access to property
At 6ix Estates LLP, we represent clients in all aspects of residential real estate transactions; both resale and new construction of detached homes, townhouses, and condominiums. Our office will take the time to understand your intended use and characteristics of the property and ensure that you get good and marketable title to the property. Contact us today for a free 30-minute, no obligation consultation.