When do mortgages or liens not impair the marketability of title?

Mortgages or liens do not impair the marketability of title when the seller can pay them off with proceeds from closing. This situation typically implies that the seller has enough equity in the property to use the funds from the sale to settle the outstanding debt before the transfer of title to the buyer. As a result, the buyer will receive a clear title, free from encumbrances, which is essential for ensuring the marketability and value of the property.

In real estate transactions, marketability of title refers to the ability of a seller to convey a property to a buyer without legal complications or claims against it. If the seller can discharge the existing mortgages or liens through the sale proceeds, it eliminates any concerns regarding the buyer assuming these debts, thus maintaining the integrity of title during transfer.

Other options might suggest scenarios where issues could still arise, such as a buyer’s waiver that might not genuinely clear the problem at hand or the assumption of debt by the buyer that may complicate the buyer's own liabilities. Minor debts may not be of significant concern, but they could still create issues during closing if not handled adequately. Thus, the ability to pay off existing liens or mortgages with closing proceeds directly addresses the issue and ensures a marketable title for the buyer.