Staley v. Stephens

404 N.E.2d 633 (Ind. Ct. App. 1980)

 

RULE:

A court of equity will not compel a purchaser to accept a title which is so doubtful that it may expose him to litigation, though the court may believe it to be good. One who contracts for the purchase of real property is not bound to accept a doubtful title, or one that would likely be involved in litigation, although it might ultimately be adjudged to be good. A marketable title is one which is free from reasonable doubt and will not expose the party who holds it to the hazards of litigation. Purchasers of real property who bargain for marketable title can not be forced to accept property with an admitted cloud on the title.

FACTS:

The parties entered a contract for the purchase of a home. At the closing, defendant buyers were to receive an abstract of title disclosing marketable title to the real estate. The survey of the property revealed that a portion of the plaintiff sellers’ house violated a city zoning ordinance. The restrictive covenants of the subdivision provided that any lot owner could enforce at law or equity any attempt to violate or any violation of the covenant by either injunctive relief or by the recovery of damages. Plaintiffs refused to obtain waivers from the other landowners. Defendants refused to go through with the sale. Plaintiffs commenced an action against defendants. In their answer, defendants counterclaimed for damages predicated upon plaintiffs’ failure to tender marketable sale. At the close of plaintiffs’ evidence, defendants moved for judgment on the evidence. The trial court granted the motion and found for defendants on plaintiff s’ complaint, and additionally, found against defendants on their counterclaim. The appellate court reversed the trial court’s decision and found for plaintiffs and against defendants on the defendants’ counterclaim for damages.

ISSUE:

Could defendant buyers be compelled to complete the purchase of plaintiff sellers’ property, despite a small defect in the title of the property?

ANSWER:

No.

CONCLUSION:

Although the defect in plaintiff sellers’ title was small, it was nonetheless a cloud on the title that could expose defendant buyers to litigation. Therefore, the title was not marketable as a matter of law. On their counterclaim, defendants had the burden of proof to present evidence of damages incurred because of plaintiffs' failure to provide a marketable title. Defendants were not able to present any evidence as to their claim.

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