Laba v. Carey

29 N.Y.2d 302, 327 N.Y.S.2d 613, 277 N.E.2d 641 (1971)

 

RULE:

When a seller contracts to deliver a title that a reputable insurance company would approve and insure, he breaches his contract when the title company refuses to insure title unconditionally and without exception. The title company's approval, however, must be unequivocal unless the exceptions are those contemplated by the contract.

FACTS:

The parties entered into a written agreement for the purchase and sale of a parcel of real property. The buyers made a down payment that was to be refunded if seller failed to perform. During the title search, an easement and restrictive covenant were found. At closing, the buyers rejected the deed on the ground that the seller was unable to deliver a good, marketable and insurable title. The buyers sought recovery of their downpayment and the appellate division found that in their favor.

ISSUE:

Do an easement and restrictive covenant do not necessarily render title to property unmarketable?

ANSWER:

No.

CONCLUSION:

On review, the court reversed and found that the seller did everything he was required to do under the agreement. The court determined that the title company assumed responsibility for no less than what the buyers had expressly agreed to accept because it excluded the easement and covenant from coverage. The court concluded that the buyers had failed to show that the easement or covenant rendered the title unmarketable.

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