Defective Title


DEFINITION of 'Defective Title'

A piece of property or asset that has a publicly-recorded encumbrance, such as a lien, mortgage or judgment. Because other parties can lay claim to the property or asset, the title cannot be legally transferred to another party. For example, a homeowner cannot sell a home if there is an outstanding tax lien on the property. That lien would first have to be cleared before any action can be taken on the property.

BREAKING DOWN 'Defective Title'

Because the property or asset cannot be legally transferred to another party, the title is considered to be unmarketable. If the title holder wants to be able to do anything, the encumbrances must first be taken care of.

  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Defect Of Record

    A public record outlining any encumbrance on a piece of property, ...
  3. Abstract Of Title

    A brief history of the titles for a piece of land. The abstract ...
  4. Quiet Title

    A lawsuit filed to establish ownership of real estate when ownership ...
  5. Perfect Title

    A title deed for real estate that does not have any liens attached ...
  6. Lien

    The legal right of a creditor to sell the collateral property ...
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