Which best defines a "marketable title"?

Marketable title refers to a title that is free of significant defects and is acceptable for sale or transfer. This means that the title does not have any legal issues that could impede the transaction, such as gaps in ownership, unresolved liens, or other encumbrances that might create uncertainty for a potential buyer. For a title to be deemed marketable, it must be clear enough to provide assurance to the buyer and any lender involved that their interest in the property will not be challenged or adversely affected.

In contrast, a title that is restricted for certain uses would not meet the criteria of marketability, as such restrictions could limit the new owner's ability to utilize the property fully. Similarly, while a title that has no associated liabilities sounds appealing, it does not necessarily guarantee that it is free of defects that might affect marketability. A title subject to ongoing litigation would represent significant legal issues, thereby disqualifying it from being marketable. Therefore, only a title that is free of significant defects and ready for transfer fully captures the definition of marketable title.