Summary of Madhavan v. Sucher, Ct of App. Michigan 1981
Facts: Plaintiffs executed an offer to purchase property from defendants. Defendant’s agent drafted the agreement and the Pl paid $3000 deposit. Pl obtained a loan 18 days prior to closing. 2 days before closing defendant’s survey results showed a drainage easement encroached very near the structure well on the property. Defendant’s made known that title insurance to this encumbrance would not issue. Pl rescinded their offer because of the encroachment.
Issue: Whether the drainage easement across the property, encroaching within a few feet of the house, was a sufficiently substantial incumbrance to deny marketable title, given title company refused to insure?
Procedure: District Ct granted summary for the plaintiffs. Affirmed by Ct. of Appeals.
Rule: An incumbrance is anything which constitutes a burden upon the title, such as a right of way, a right to take timber off, or a right of dower. Where a reasonably prudent man, familiar with the facts, would refuse to accept title in the ordinary course of business, then the title is unmarketable.
Ct. Rationale: The obligation of the vendor to provide a marketable title, which title must be fully insurable superseded the contractual provision. The drainage easement across the property was a sufficiently substantial incumbrance as to nullify the marketable title. The subject to provision was in direct conflict with the provision requiring the conveyance of a marketable title.
PL A: Without title insurance covering the encumbrance totally, or removal of the encumbrance from the title PL owes no duty to perform under an unmarketable title.
Def A: No title subject to incumbrance would be marketable even if vendee agreed to purchase subject to certain easements.