What is Marketable Title?
Before issuing title insurance, Ohio statutes require that a reasonable title examination be conducted. Title agents are required to keep evidence of the reasonable title exam for not less than ten years. Title is examined to determine if title is marketable and whether there are any liens or encumbrances against the title to the property.
In Ohio, real estate purchase agreements often require the seller to convey to the buyer “marketable title” at the closing. Marketable Title is the one which conveys such ownership rights so as to insure that the buyer will have the peaceable enjoyment and control of the land, as against all others.
Summarized another way, marketable title is:
Sufficient to support or defend an action in ejectment
Shows a full and perfect right of possession in the seller
Should appear reasonably certain that the title will not be called in question in the future so as to subject the purchaser to the hazard of litigation
Title that embraces the entire estate or interest sold; and, free from the lien of all burdens, charges, or encumbrances which present doubtful questions of law or fact.
Terms like seller shall convey “good and marketable title” or “clear and marketable title” are used to describe the title to be delivered. “Good title” is not really a higher or better title than a marketable title, which itself is good title. “Clear title” is a title which is free of liens and encumbrances. Purchase agreements sometimes say “seller shall convey marketable title free and clear of all liens and encumbrances except” and then list the acceptable encumbrances, such as taxes not yet due and payable, zoning ordinances, restrictions and conditions of record, and easements which do not materially or adversely affect the use or value of the property.
Ohio has a Marketable Title Act which states “any person having the legal capacity to own land in this state, who has an unbroken chain of title of record to any interest in land for forty years or more, has a marketable record title to such interest.” There are exceptions which include railroad and utility easements, certain rights of landlords and lessees in possession, coal and mining rights and interests of the state or federal government.
The idea of the Marketable Title Act is to extinguish those older liens or encumbrances which do not appear in the chain of title as revealed in the public records for a period of forty years prior to the time of the search or examination. To ascertain whether a title is statutorily marketable, the title examiner or searcher must start in the public records with a “Root of Title” not less than 40 years from the date of the search. The “root of title” is defined as a “conveyance or other title transaction” and many examiners will go back 40 years, locate the owner at that time and then locate the deed where this owner acquired the property. That deed, being 40 or more years old, will be the “root of title” for this marketable title search.
To learn more about the importance of Marketable Title or to order a Title Exam on your property, call or e-mail our offices at 330.686.2282 or kaley@buckeyereserve.com