Good Title
Title to property that is free from encumbrances, claims, or defects; a seller with good title can transfer clear ownership to the buyer without risk of third-party claims.
While straightforward in theory, many businesses fail to actively track obligations tied to this concept - often resulting in missed deadlines, unintended renewals, penalties, or loss of contractual rights.
US Law · For business owners and foundersWhat is a Good Title?
Good title is title to property that is free from encumbrances (liens, mortgages, easements), claims by third parties, and defects in ownership. When a seller has good title, the seller can transfer complete and clear ownership to the buyer. The buyer will not face claims from creditors, tax authorities, or other parties asserting rights to the property.
Under the Uniform Commercial Code (UCC) and general property law, a seller has an implied obligation to warrant good title - meaning the seller promises that the seller owns the property, has the right to sell it, and that no other party has claims to it. If the seller lacks good title, the buyer can reject the goods or sue for breach of warranty.
Good title does not mean perfect title - minor title issues or standard encumbrances (like HOA covenants or utility easements) may not prevent title from being "good." But major defects - disputed ownership, liens, or claims - prevent title from being good.
In practice, many teams rely on a contract expiry tracking system to stay on top of dates and obligations tied to clauses like this.
Key Elements
Ownership
The seller must actually own the property. Selling property you do not own is breach of warranty of title and may be theft or conversion.Right to Sell
The seller must have the legal right to sell. If the property is encumbered by a mortgage, the seller must pay off the mortgage at closing or the title is not good.Freedom from Liens and Encumbrances
Good title is generally free from liens (creditor claims), mortgages, tax liens, and judgment liens. Standard property encumbrances (like utility easements or HOA covenants) may be acceptable.Marketability
Good title is "marketable" - a reasonable buyer would accept it. Title that is legally valid but difficult to sell (e.g., disputed boundary lines) may not be "good."Real-World Example
John buys a house from Mary. Mary signs a deed transferring the house to John. Six months later, a creditor appears claiming Mary owed $200,000 and has a lien on the house. The creditor enforces the lien and forces the sale of John's house. John sues Mary for breach of warranty of good title.
John should recover from Mary. Mary did not have good title - the property was encumbered by a lien. Mary breached the implied warranty that the title was good and free from claims. John can recover the loss of the property or damages equivalent to the value.
This is why many businesses adopt automated deadline tracking to ensure no critical dates are missed before they pass.
Sample Clause Language
Warranty of Good TitleWatch Out For
Title defects can appear years after purchase
Some title defects (like unknown liens or disputed claims) may not appear until years after purchase. Title insurance protects against these.Encumbrances reduce the value and marketability of property
Even if you ultimately have the right to sell, if there are encumbrances, the title is not good and the buyer can reject it or claim damages.A seller without good title has breached the contract
If you discover the seller did not have good title, you have a claim for breach of warranty. You can sue for damages or rescission of the sale.Don't let good title deadlines catch you off guard
Key dates tied to good titles - renewal windows, expiry cutoffs, notice periods - can easily slip through the cracks when tracked manually. Missing them triggers automatic extensions, penalties, or lost rights. ExpiryEdge tracks every critical deadline and sends automated reminders before they're due - so nothing slips.
Instead of relying on spreadsheets or manual follow-ups, a centralized renewal reminder system ensures every deadline is visible, tracked, and actioned automatically.
How to Use This in Your Favor
Always get title insurance
Title insurance protects you against title defects and hidden claims. It is cheap compared to the risk of losing the property or having to pay off unexpected liens.Conduct a title search before purchase
A title search reveals liens, mortgages, and claims against the property. Do not buy without a clean title search.Require the seller to show proof of good title
Require the seller to provide a title report or commitment for title insurance showing the property is free from defects.Related Terms
Frequently Asked Questions
What if the seller had a mortgage and did not pay it off before transferring to me?
The mortgage is a lien on the property. You acquired the property subject to the lien. This is not good title. You can sue the seller for breach of warranty and require payment of the mortgage.
Does good title require a title insurance company's approval?
No, but a title company will search the records and insure good title. If the title company will not insure, the title is likely not good.