Marketable title: a mandatory requirement
The marketable title is a tile of the property that is free of any kind of defect and belongs in all the way to the seller. The term marketable means that the title or the ownership of the property is good enough to be acceptable by the buyer by all means. The marketable title is the one that can be transferred to the buyer without any fear of any kind of title claims made on the property. In the contract of sale unless specified, it is assumed that the seller possesses a marketable title that will receive the title.
But f the claims against the property are there the title does not remain marketable. For instance there could be encumbrances such as debts that have not been paid, or unpaid interests that are now lying as lien on the property. The lien is an instrument that can give the creditor a right over the property till all the debts have been cleared. But if the lien holder does not take any action regarding the lien, it ets diluted and the title becomes marketable again.
The title is mandatory to be marketable because otherwise the buyer has the full right to rescind the sale and the seller has to return all the money to the buyer. If a property is used as a collateral for any kind of loan then too, the title is not considered marketable and the buyer has the full right to rescind from the contract.
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