www.crej.com July 7-20, 2021 - Page 29 Law & Accounting What does the term ‘good and marketable title’ mean?

ou may have seen the but not mar- standings about marketable exclusions and exceptions deed. For example, a general phrase “good and mar- ketable? Yes. title. Marketable title relates that limit and/or exclude the warranty deed includes a war- ketableY title.” Do you know For exam- to whether there are defects title company’s liability with ranty that the property is free what it means? ple, if you affecting rights in ownership respect to claims arising under and clear from all encumbranc- ■ What is marketable title? have title rather than defects affecting them. These exclusions and es except as stated in the deed. Marketable title means a title via 18 years physical condition or use of exceptions can have a dramatic While that may require passing that a reasonably prudent per- of adverse the property. For example, in impact on value. To avoid over- marketable title, it is subject to son with knowledge of all of possession Colorado, if you have to drive paying, a careful buyer will the exceptions, which often are the applicable facts and law but haven’t across your neighbor’s prop- examine them in detail and copied verbatim from the title would be willing to accept. The obtained erty to access your property may request that they either commitment. A special war- Michael using an easement that your ranty deed warrants title only title must be reasonably free McCormick a judicial be deleted from the title policy from doubts that would affect Shareholder, decree quiet- neighbor can revoke at will, or ask the title insurance com- against adverse claims asserted Montgomery Little & you still may have marketable by someone whose interest is the market value of the prop- Soran PC ing title, then pany to issue an endorsement erty and must be reasonably your title title. That is because vehicular to insure over the title defect. claimed to have been derived certain not to be called into may be good access affects the physical con- ■ Does the sales contract from the grantor. Always care- question in the future such as but not marketable. While hav- dition or use of the property, require marketable title? fully check the warranties and not the right to ownership. to subject the purchaser to the ing a good and marketable title Some sales contracts require exceptions in the deed to be While many title policies do hazard of litigation. does relate to value, they are the seller to convey good and conveyed before purchasing a insure a limited right of access, property. So how do we decide what a not the same. You can own marketable title to the buyer. the policy may not require an ■ Conclusion. Title insur- reasonable buyer would accept good and marketable title to a The Colorado Real Estate Com- access suitable to the policy- ance and the Colorado Real in a particular situation? The cheap digital watch, but that mission approved forms only holder’s needs. For example, a Estate Title Standards help pro- answer often depends on tra- is not the same as owning a state that the seller must pro- revocable access easement may vide certainty and dependabil- ditional customs and practic- genuine Rolex. vide a title commitment for a be sufficient under this provi- ity for real estate transactions es in the industry. Colorado ■ What is insurable title? policy but do not require the sion even though it would neg- with respect to marketable title. statutes, judicial decisions Generally, insurable title means seller to deliver good and mar- atively impact market value. However, you should always ketable title. Once the deed is or the Colorado Real Estate a title company will insure it. It The policy also may not insure carefully review the title insur- Title Standards issued by the is not the same as marketable that you can use the access for conveyed, any warranties in ance commitment provisions, Colorado Bar Association may title. A title company may be a particular use, for example, the contract will merge into exclusions and exceptions, and apply. This article is a gen- willing to insure an unmarket- for commercial use. You should the deed such that the contract the deed to be conveyed, to eral discussion of issues. You able title if the buyer purchases carefully check that the access no longer applies. Only the make sure you are getting what should consult with a lawyer to an endorsement and/or pays will be sufficient for your use deed will apply with respect to you are paying for. address specific circumstances an increased premium. Accord- before purchasing a property. whether the seller had to pass Elizabeth Deline Williams, an that may be applicable to your ingly, a title may be insurable ■ Will a title policy insure marketable title. attorney with Spierer, Woodward, ■ situation. but not marketable. Make sure me against unmarketable Does the deed require Corbalis & Goldberg, contributed ■ What is good title? Good you know which kind of title title? The answer is it depends marketable title? The answer to this article. ▲ title means title that is unas- you are buying. on the terms of the policy. is it depends on the type of sailable. Can your title be good ■ Common misunder- Title policies typically include deed and exceptions in the [email protected]