Land contract, Real Estate & "Marketable Interest"

In My Humble Opinion
1

We are selling a piece of raw land and there is one sentence we need help with. It is in the clause where they can assign the contract to a third party before the deal closes if an opportunity comes up for flipping the land. Here is the sentence in question

By signing this contract, seller agrees to give CompanyName marketable interest for the described property.

They say marketable interest means they can market the property before they own it, for flipping purposes I guess. But I thought “marketable interest” meant ownership and so this would give them an ownership stake in the house before ever paying for it. Can someone more familiar with real estate contracts translate for me please?

2

IANAUSL but, for what it’s worth:

Once they have a contract signed by the seller, the owner does have an interest in the land. The interests falls well short of ownership of the land; it’s basically the right to acquire ownership of the land by enforcing the contract against the seller in accordance with the terms of the contract.

As far as I can see, what the “marketable interest” clause does is give the seller under the contract the right to assign that interest to a third party.

3

That’s the question: what sort of interest if they haven’t actually paid for the land?

4

They have the right to enforce the contract. If you and I sign a contract under which you will sell me Blackacre for $100, when I pay you the $100 you have to transfer Blackacre to me. If necessary a court will compel you to.

Which means that if a third party comes along and offers you $120 for Blackacre, you can’t accept.

But, because my interest is a marketable interest, I can. For $20 I can assign my rights under the contract to the third party, and then they can compel you to transfer Blackacre to them for $100.
They pay a total of $120 to acquire Blackacre, which is what they were willing to pay all along, you get $100 which is what you contracted to sell for, and I get $20 for being the right person in the right place at the right time.

Another way to look at it is that any rise in the market value of the land occurring after the contract has been signed accrues to me, the buyer, rather than to you, the seller.