The gold standard for titles, is called a merchantable title. It is not a title free of all defects, but one that is unlikely to give rise to litigation, for no one buys real estate to have their title challenged.
It is a title that a knowledgeable and prudent buyer would be likely to accept. That is all we can hope for in real estate law transactions. We do not live in a perfect world. What makes a title un-merchantable? There are any number of possible clouds on a title. Some are easily fixed and some are not.
- Un-cancelled or un-released mortgages.
- Judgments or judicial mortgages.
- Materialmen’s and mechanics’ liens.
- Administrative penalties or fines.
- Public Health and Code Enforcement liens.
- Federal IRS liens.
- Tax sales and unpaid property taxes.
- Minor’s mortgages and Judicial or Surety Bonds.
- Property interests in the the names of people that were not accounted for or transferred to the present owner.
- Encroachments. Survey issues.
- Lis pendens notice which indicates litigation involving the property.
- Zoning violations.
- Erroneous property descriptions, unsigned deeds.
- Lack of corporate capacity.
