Definition - What does Merchantable Title mean?
A Merchantable Title is a title used for real property that bears no litigation, debt or defects making the property suitable for selling or mortgage purpose. It is also known as a marketable title, sound title, clear title or good title. A buyer is free to accept a property that bears the Merchantable Title. However, a property with Merchantable Title does not claim it to be free from defects. The title is more suitable for a buyer who is educated and cautious to understand the possibilities of the business.
Petropedia explains Merchantable Title
A Merchantable Title declares a real property to be free from disputes, debts or other defects which would otherwise make the property unsellable. Any property that has the Merchantable Title can be sold or put for mortgage to a prospective buyer or mortgagee. A property's merchantability is decided by the court of law. However, a real property with a Merchantable Title does not make the property to be free from defect and does not confirm its validity. It is the responsibility of an educated buyer to be willing to purchase the real property, for example a piece of land.