If you’ve been doing a little research on home titles and title insurance, you may have come across the terms “clear title” and “marketable title.” These are both terms that inform us as to the status of the title on a home. The first thing you should know is that both a clear title and a marketable title are a good thing. However, there are a few differences between the two that are worth knowing. Learn about clear and marketable titles in this week’s blog!
A clear title is a title to a property that has no encumbrances. An encumbrance is anything that detracts from the status of a fee simple title, which is the “maximum and best possible right of ownership of real property.” Essentially, a clear title gives you free reign over your property. You can build whatever you want wherever you want it on your property, so long as it doesn’t cross the property line. A clear title also has no financial encumbrances on it from previous owners such as unpaid taxes, mortgages, liens, etc.
A marketable title is a title that may have encumbrances on it, but these encumbrances would not be cause for concern regarding litigation or sale of the property at a fair market price. Essentially what this means is that there are no financial encumbrances on the title such as unpaid taxes, etc., but there are land use encumbrances on the title. These include things such as zoning restrictions or building restriction lines. Or it may include a piece of property which crosses the owner’s property in some location, such as a public walkway to the beach at a beachhouse. It is understood that these land use encumbrances may limit what the owner can do on his or her property and may diminish its value, but overall the title is clear enough to sell at a fair price, and without fear of litigation as a result of financial encumbrances.
An unmarketable title would be a title that is hindered by financial encumbrances or certain other encumbrances such as a violation of zoning restrictions. This title could not be sold, thus making it unmarketable.
About Colony Title Associates:
Founded in 1995, Colony Title Group handles in excess of 2000 real estate closings in Washington DC and the Delmarva area every year. The founder Tee Tillman has over 23 years experience in the title and real estate law fields. Colony handles closings for several lenders, including banks, credit unions and mortgage brokers. Colony is the preferred choice for many real estate brokers in the Baltimore area. If you have any questions concerning issues that Baltimore title insurance protects you from, feel free to contact us at 410 884-1160 or visit ColonyTitle.com today!