Marketability of Title is the
condition precedent for sale of any immovable property. Under Section 55(1) (a)
of the Transfer of Property Act, the seller is bound to disclose any material
defect in the property or title and to produce all the documents of title to
answer the requisitions on title made by the purchaser. Under Section 55(2) of the aforesaid Act, the
Vendor is deemed to warranty the title or the right to sell.
The statutory covenant of title is
implied in every contract for sale of an immovable property, even if there is
no express clause embodying such a warranty. The term “Marketable Title” refers
to absolute right, title, interest and ownership of the Vendor to convey the
property without any hindrance.
In other words, the title is
considered to be marketable if the same is free from encumbrances, claims and
beyond reasonable doubts. Thus, if there is any encumbrance or claims and the
vendor does not discharge it, the title cannot be said to be marketable.
In fact, Section 55 (1)
of the Transfer of Property Act envisages that if the property is sold
subject to any encumbrances or claims, it should be so clearly stated and the
Vendor will be under obligation to discharge any such encumbrances existing at
the time of sale on the property.
Implied warranty of title on the part
of the Vendor, although absolute, will not however apply to cases where there
is a clear contract between the parties to the contrary.
Such a contract can be either express
or implied, but the contract must be such as would clearly negate the warranty
of title.
In order to examine the title of the
Vendor, the purchaser has to examine all the relevant title deeds in the
possession or power of the Vendor. Under
Section 55(1) (b) of Transfer of Property Act, the Vendor is under an obligation
to produce not only those documents in his possession but also in his power to
produce.
Thus, if the Vendor has deposited the
title deeds with a mortgagee, the Vendor has to produce such documents for
inspection of the purchaser through mortgagee. However the Vendor is not under
an obligation to produce irrelevant documents not in his possession or power
but it is the discretion of the purchaser to inspect the same at his own cost.
It is only after production of all
the relevant title deeds, assistance of advocates having sufficient experience
in the scrutiny of the title documents will help the purchaser to conclude
whether the Vendor has got marketable title or not.
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