Laba v. Carey, 29 N.Y.2d 302 (1971)

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When a real estate contract contains both a “subject to” clause (making the conveyance subject to easements and restrictions of record) and an “insurance” clause (requiring the seller to provide title that a reputable insurance company will approve and insure), the clauses should be read together, and the seller does not breach the contract if the title company insures the title subject to those contemplated exceptions.

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Summary

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Laba (seller) contracted to sell real property to Carey (purchaser), with the contract stipulating that the title would be insurable by a reputable title company and subject to existing easements and restrictions. The title company found a telephone easement and a “Waiver of Legal Grades” covenant, excepting these from coverage but insuring that they were not violated. Carey rejected the title, arguing it wasn’t marketable or insurable without exception. The New York Court of Appeals held that because the contract made the sale explicitly subject to existing easements and restrictions, the title company’s insurance, with exceptions for those items, fulfilled the seller’s contractual obligation. The court emphasized that contracts should be interpreted to give effect to all provisions, and that buyers shouldn’t be able to escape their contractual duties over trivial exceptions.

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Facts

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Carey (respondent) and Laba (appellant) entered into a contract for the sale of real property. The contract stipulated that the title should be one that any reputable title company would approve and insure. The contract also stated the conveyance was subject to covenants, restrictions, utility agreements, and easements of record if they were not currently violated, and any state of facts an accurate survey might show, provided it did not render title unmarketable. After the contract was signed, Inter-County Title Guaranty and Mortgage Company found a recorded telephone easement and a