Under an installment land contract that requires delivery of a warranty deed upon payment of the last installment, there is an outstanding mortgage securing 25% of the purchase price. The buyer discovers the mortgage while paying; What is the correct statement about when marketable title must be delivered?

• A. No, because the time for the seller to deliver marketable title has not arrived.
• B. A mortgage can render title unmarketable immediately, so damages are due now.
• C. Title does not have to be marketable until the mortgage is paid off.
• D. No, because the mortgage debt will be paid off by the time closing.

Answer: (A)

In an installment land contract, the seller keeps legal title until the buyer completes all payments and the deed is delivered. Marketable title is required at the moment of conveyance, not before. Because the deed is only delivered after the last installment, the time for delivering marketable title has not arrived yet. The outstanding mortgage is an encumbrance, but it is addressed at the closing when the title is actually conveyed and the mortgage is paid off or released. So the correct statement is that marketable title must be delivered at the time of deed delivery, i.e., after the last payment, not now. The other options incorrectly push or misstate when marketable title must be free of encumbrances or assume immediate damages or guaranteed payoff before closing.