Nelson v. Anderson Case Brief

Summary of Nelson v. Anderson, App. Ct. Illinois 1997

Facts: The Nelson’s contracted to sell their home to the Andersons who put $1500 down as earnest money, the balance due on delivery of warranty deed, conveying a merchantable title, free and clear of all encumbrances, except those in the contract. The title report declared an encumbrance. The sellers obtained written assurances from title insurance company that the exception would be insured, including future subsequent buyers. Buyers refused to close and purchased another property.

Issue: Whether, as a matter of law, the title is a perfect title and merchantable?

Holding: No. There was the possibility of litigation after the purchase.

Procedure: Summary Judgment was granted, by Circuit Court, to the buyer/appellees stating that sellers did not have merchantable title. Affirmed.

Rule: A title is merchantable if it is reasonably secure against hazard, annoyance, and expense of future litigation, and if a reasonable person will accept it not subject to cloud or doubt that would affect its market value.

Ct. Rationale: In reviewing the trial court’s grant of summary, the court can only look as to whether the pleading show no material issues of fact and that the moving party is entitled by law.

The issue of this title as being merchantable is a question of law. The title is encumbered by a restrictive covenant, thereby any and every owner within the subdivision may sue to enforce. The title at issue is clouded by the fear of future litigation and places a negative effect on the market value. The title insurance did nothing to the encumbrance, it still remained in full force. The law cannot compel a buyer to purchase a lawsuit.

PL A: An issue of material fact exists, the title was merchantable within the terms of the contract which the buyers entered into freely.

Def A: The title was clouded by an encumbrance of which the seller did not remove or remedy.

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