Merchantable Title Law and Legal Definition
Merchantable title a title to a real property that is clear and free from encumbrances, litigation, and other defects, and that can readily be sold or mortgaged to a reasonable buyer or mortgagee. It is a title that a court of equity considers to be so free from defect that it will legally force its acceptance by a buyer. Whether title to real estate is merchantable is a question of law for the court.
A merchantable title does not assume absolute absence of defect. It is a title that a prudent, educated buyer in the reasonable course of business would accept.
It is also termed good title, marketable title, clear tilte, or sound title.
The following is an example of a case law defining the term:
Merchantability can and must be decided by the court as a matter of law when sufficient evidence concerning the surrounding facts is determinable from the record. Merchantable title is a title not subject to such reasonable doubt as would create a just apprehension of its validity in the mind of a reasonable, prudent and intelligent person; one that persons of reasonable prudence and intelligence, guided by competent legal advice, would be willing to take and pay the fair value of the land for. It has also been defined as "not perfect title, but rather title reasonably secure against litigation or flaws decreasing market value. These definitions should be utilized by the trial court and applied to the myriad of circumstances that may exist in any given case. [Sinks v. Karleskint, 130 Ill. App. 3d 527 (Ill. App. Ct. 5th Dist. 1985)].