Summary of Laba v. Carey, Ct of App NY 1971
Facts:Ely Laba (Resp) entered into an agreement, with Carey, (Applnt)to purchase property. Laba made a $5700 deposit. This sum, plus the net costs of title examination and survey, was made a lien, and was refund in event Carey failed to perform. Title was to be free of all encumbrances, and free of all notes or notices of violations of law or municipal ordinances. Sale and conveyance were subject to: two tenancies, one of which would be served with 30 day notice to terminate. Title was also subject to: covenants, restrictions, utility agreement and easement of record, if any, now in force, provided same are not now violated. Title search revealed a Waiver of Legal Grade a restrictive covenant. The level of the property was apprx one foot below legal grade. Respondents request their deposit and costs.
Issue: Whether the fluctuating grade levels of the property rendered the title unmarketable?
Procedure: Appellants’ Motion for Summary was granted by Special Term of S. Ct. Appellate Division reversed and Court of Appeals Reversed Appellate Division granting appellants’ Motion for Summary.
Rule: If encumbrances affect title, burden the property or limit the use renders the title unmarketable. Purchasers are entitled to marketable title unless otherwise agreed upon in the contract.
Ct. Rationale: The contract made the conveyance subject to “any state of facts an accurate survey may show, provided same does not render title unmarketable." The respondent agreed to the Waiver of Legal Grade, and as all other property owners in the area, is liable for maintenance and repair of sidewalks of the individual owners. This is normal incident to owning property, not a determination that would rise to the level of doubt that would affect marketable quality and value.
PLA: The level grade encumbrance renders the property disabled for resale and not free of reasonable doubt.
Def A: Defendant fully performed under the agreement.