Voorheesville Rod & Gun Club, Inc. v. E.W. Tompkins Co., Inc., 70 N.Y.2d 984 (1988)
A title is not rendered unmarketable merely because the sale of a portion of a parcel violates subdivision regulations, where the contract does not require the seller to obtain subdivision approval and the regulations pertain to the use, not the ownership, of the land.
Summary
Voorheesville Rod & Gun Club contracted to buy a portion of Tompkins Co.’s land. The contract made the sale subject to zoning laws but didn’t require Tompkins to obtain subdivision approval. The Club later demanded Tompkins obtain this approval, arguing its absence made the title unmarketable. Tompkins refused, canceled the contract when the Club didn’t close, and returned the deposit. The Club sued for specific performance. The Court of Appeals held that while the subdivision regulations applied to the sale, Tompkins’ failure to obtain approval did not render the title unmarketable because the contract didn’t mandate it and zoning laws affect land use, not title ownership.
Facts
On January 15, 1986, Voorheesville Rod & Gun Club, Inc. (plaintiff) contracted to purchase a portion of E.W. Tompkins Company, Inc.’s (defendant) property for $38,000. The property consisted of 24.534 acres of undeveloped land intended for recreational use, and the contract specified conveyance by warranty deed, subject to covenants, conditions, restrictions, easements, zoning, and environmental protection laws, provided these didn’t render the title unmarketable.
Prior to the closing date, the Club requested Tompkins comply with the Village of Voorheesville’s subdivision regulations. Tompkins didn’t comply, issued a time-of-the-essence notice, and canceled the contract when the Club failed to close, returning the $5,000 deposit.
The Club then claimed the cancellation was unacceptable due to Tompkins’ failure to obtain subdivision approval, which allegedly rendered the title unmarketable and prevented their financing bank from closing.
Procedural History
The Club sued for specific performance or damages. Supreme Court ordered specific performance, directing Tompkins to seek subdivision approval. The Appellate Division affirmed, stating that the sale was subject to subdivision regulations, and Tompkins’ refusal rendered the title unmarketable.
After subdivision approval was obtained, the Supreme Court directed Tompkins to transfer the property. All causes of action were discontinued except the Club’s claim for specific performance. The Court of Appeals granted Tompkins leave to appeal, reviewing the prior Appellate Division order.
Issue(s)
1. Whether the Village of Voorheesville’s subdivision regulations apply to a conveyance of a portion of land intended to remain undeveloped.
2. Whether the seller’s failure to seek subdivision approval before the transfer renders the title unmarketable, absent a contractual obligation to do so.
Holding
1. Yes, because the Village’s subdivision regulations define “subdivision” as the division of land into two or more lots, and the proposed transaction involved the division of land, regardless of the intent to develop it.
2. No, because the contract did not require the seller to obtain subdivision approval, and existing zoning regulations affecting land use, as opposed to title ownership, generally do not render a title unmarketable.
Court’s Reasoning
The Court reasoned that the Village’s subdivision regulations applied because the transaction constituted a subdivision as defined in the regulations. The regulations required subdivision approval whenever any subdivision of land is proposed, regardless of whether development is intended. The Court rejected the seller’s argument that approval was only required when a building permit would be sought, noting this would limit the regulations’ broader policy of orderly development.
Regarding marketability of title, the Court emphasized that the contract was silent on the issue of subdivision approval. Paragraph 4 of the contract stated that the property would be conveyed subject to zoning and environmental protection laws, provided that this did not render the title unmarketable.
The Court stated: “where a person agrees to purchase real estate, which, at the time, is restricted by laws or ordinances, he will be deemed to have entered into the contract subject to the same [and] [h]e cannot thereafter be heard to object to taking the title because of such restrictions”.
Marketability of title concerns impairments on the right to unencumbered ownership and possession, not legal public regulation of the use of property. A zoning ordinance existing at the time of the contract, which regulates only the use of the property, is generally not an encumbrance making the title unmarketable, citing Lincoln Trust Co. v Williams Bldg. Corp., 229 NY 313, 318.
Because the seller did not warrant or represent that it would obtain subdivision approval, the buyer agreed to purchase the property subject to the zoning laws. The Court declined to expand the conditions that render title unmarketable, suggesting instead that parties include specific provisions addressing the duty to obtain subdivision approval in their contracts.