Marketable title

Key Takeaways

• Marketable title is title a reasonable, well-informed buyer would accept and a court would compel a buyer to accept. It is not title with zero imperfections.
• A defect that would expose the buyer to litigation, such as a break in the chain of title or an unreleased lien, is what makes title unmarketable.
• A Washington statutory warranty deed carries covenants that the grantor held an indefeasible estate in fee simple, that the property was free from all encumbrances, and that the grantor will defend the title (RCW 64.04.030).
• An unrecorded conveyance is void against a later good faith purchaser for value whose conveyance is recorded first (RCW 65.08.070), which is why the public record is where marketability gets tested.

What It Means

Marketable title is ownership free enough of doubts, liens, and defects that a reasonable buyer would take it without objection and a court would order the buyer to close. The standard is not perfection. A title with a recorded utility easement the buyer knew about and agreed to accept is still marketable. A title with a $14,000 judgment nobody released, or a deed missing from the Chain Of Title fifty years back, is not, because the buyer would be taking on somebody else's fight.

Proving marketability is record work. Someone has to trace the transfers from the current owner back toward the original grant and confirm that every link is there and every Encumbrance is either released, disclosed, or accepted. In practice a title company does that trace and issues a preliminary commitment listing what it will insure and what it will except. When an encumbrance would interfere with the buyer's use of the property, the seller is not delivering marketable title, and the deal can be terminated. Buyers rarely see any of this until the commitment lands, which is why our walkthrough of your first real estate closing puts the title review early.

How It Works in Washington

Washington does not define marketable title by statute. It builds the standard out of three other rules. First, the deed. RCW 64.04.030 says a statutory warranty deed carries covenants that the grantor was lawfully seized of an indefeasible estate in fee simple, that the property was then free from all encumbrances, and that the grantor will defend the title against all lawful claims. A seller who delivers that deed is promising marketable title in writing.

Second, the record. RCW 65.08.070 makes an unrecorded conveyance void as against a subsequent purchaser or mortgagee in good faith and for value whose conveyance is first duly recorded. That is why a missing recording is a real defect and not a paperwork nuisance. Third, disclosure. The seller disclosure statement in RCW 64.06.020, the Form 17 brokers handle every week, asks the seller whether there are rights-of-way, easements, or access limitations affecting the buyer's use, whether there are encroachments, boundary agreements, or boundary disputes, and whether covenants, conditions, or restrictions are recorded against the property. Boundary answers are the ones that most often turn into title problems, as our explainer on Washington boundary and fencing law shows. Title Insurance is the market's answer to what is left.

Example

Ellen Park signs a purchase and sale agreement to buy a house in Olympia from Ray Coburn for $610,000, with closing set 40 days out. The preliminary title commitment comes back showing a $14,300 judgment recorded against Ray four years ago that was never released, plus a recorded 10-foot utility easement along the rear lot line.

The easement is disclosed, it is on the record, and Ellen accepted it in the contract, so it does not defeat marketability. The unreleased judgment does, because it is a lien Ellen never agreed to take on and it would follow the property. Ray has two ways out: clear it or lose the sale. He pays the $14,300 from his proceeds at closing, the release is recorded, the title company drops the exception, and Ray delivers a statutory warranty deed carrying the covenants in RCW 64.04.030. Ellen closes at $610,000 with marketable title.

Common Mistakes and Exam Traps

• Marketable title does not mean perfect title. It means title free of defects serious enough that a reasonable buyer would refuse it or a court would not force the buyer to take it.
• A quitclaim deed conveys whatever interest the grantor happens to have and promises nothing about the quality of title. The covenants in RCW 64.04.030 come with a statutory warranty deed.
• Equitable title is not marketable title. Equitable title is the buyer's interest once the contract is signed. Marketability describes the quality of the title the seller has to deliver at closing.
• An unrecorded deed can still be good between the two parties who signed it, yet it is void against a later good faith purchaser who records first under RCW 65.08.070. That gap in the record is what makes the title unmarketable.