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What is Good Title?

Good Title in legal terms refers to the rightful ownership of property, typically real estate, which is free from any liens, disputes, or legal questions about the property's ownership. It means that the owner has the legal right to transfer or sell the property, and the title is clear of defects that could challenge the legality of ownership or cause issues in future transactions. According to a report by First American Financial Corporation, title defects affect less than 1.2% of real estate transactions, highlighting the effectiveness of title searches and insurance in ensuring Good Title.

Ensuring Good Title is crucial when purchasing property, as it protects buyers from potential future legal actions or claims against their ownership. For instance, a 2020 study by the American Land Title Association (ALTA) found that title insurance companies spent $608 million in 2019 to protect property owners from financial loss due to title defects. This underscores the importance of thorough title searches and title insurance in real estate transactions, providing peace of mind and security in one's investment.

Daphne Mallory
Daphne Mallory

Good title in property law refers to a title that does not have any encumbrances or liens on it. A seller often has to present good title in order to complete the sale of property, because it’s one of the key provisions of a purchase contract. The alternative name for it is a clear title. In the real estate industry, good title has become synonymous with marketable title, which means that a court of equity will find that there is no reasonable doubt that the property can be freely sold or purchased, and therefore the purchase contract can be enforced. Good title often refers to the legal or equitable bundle of rights in a property, which includes the right to exclusively possess, use, and enjoy the property and the right to convey or partition the property. The status of property title can be verified by examining records at the custodian of records, such as the Registry of Deeds.

A bad title is not only a title that is not clear, but one that a court of equity or a court contemplating equitable relief would deem non-marketable. That is, the court finds that there are reasonable doubts as to whether the property is free of liens and encumbrances, and therefore the buyer is not compelled to complete the sales process. If the title is marketable, then the court using equity law may declare it as good and enforce a sales contract.

The term good title describes properties that do not have any encombrances or liens.
The term good title describes properties that do not have any encombrances or liens.

Individuals often obtain title insurance if they are concerned about unknown facts arising after the sale and to protect against financial loss. It can be purchased to protect the owner of the property against claims of a faulty title or the buyer, and it’s often required by mortgage lenders on the buyer’s side. The reason is that the insurance company has to pay for financial loss due to bad title, as well as legal defense if actions are brought against the buyer. The insurance indirectly protects the lender’s interest in the property.

Real estate lawyers, property title search companies, and buyers can often search public records to determine whether the title to a property is good. Beginning with the seller, the buyer can research the chain of ownership to confirm that the seller is the rightful owner of the property and has the authority to sell it. In some jurisdictions, the examination of records to determine good title and issuing an option on the title is called an abstract. The buyer can sue the lawyer or property title search company for negligence if the title is in fact not a good title, and it may be the buyer's only option if he or she did not purchase title insurance. A title insurance company provides an abstract, and it also insures against errors on its part.

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Discussion Comments


I've also heard it called a "clear title". I had to sell a car for a relative one time and she swore it had a good, clear title. I wrote up a bill of sale for the buyer and he went to the local license bureau to change out the tags and assume the title. He called me back a few hours later and said the title had a lien. We had to find out who had the lien on it, then how much it would cost to remove it. Fortunately, the lien was released the next day and the buyer didn't back out of the deal.

Before you try to sell anything that has a title, take the time to find out if there's any liens or other legal holds on it. Sometimes people forget about a small loan that used that property as collateral.

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    • The term good title describes properties that do not have any encombrances or liens.
      By: Andy Dean
      The term good title describes properties that do not have any encombrances or liens.