Escrow & Title
A marketable (merchantable) title in Illinois is one that is:
ATitle guaranteed to be free from all encumbrances
BTitle that is reasonably free from defects, encumbrances, and competing claims, such that a reasonable buyer would accept it✓ Correct
CTitle insured by a title company
DTitle that has been reviewed by a licensed attorney
Explanation
Marketable title is title that is reasonably free from defects, encumbrances, and competing claims to the extent that a reasonable buyer in the market would accept and pay fair market value for it. Defects that are merely technical or easily resolved may not prevent marketability, but material defects would.
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Key Terms to Know
Encumbrance
Any claim, lien, charge, or liability attached to real property that affects its value or limits its use.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Abstract of TitleA condensed history of a property's title, summarizing all recorded documents and encumbrances affecting it from the earliest record to the present.
Math Concepts
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