New York Law Review

Tag: Marketable Title

  • Voorheesville Rod & Gun Club, Inc. v. E.W. Tompkins Co., Inc., 70 N.Y.2d 984 (1988): Marketable Title and Subdivision Regulations

    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.

  • Regan v. Lanze, 40 N.Y.2d 475 (1976): Marketable Title Requires No Parol Evidence

    40 N.Y.2d 475 (1976)

    A marketable title is one that can be readily sold or mortgaged to a person of reasonable prudence, and it must be free from reasonable doubt, requiring no resort to parol evidence to prove its validity.

    Summary

    The plaintiffs sought specific performance of a contract to purchase real property, claiming the defendants’ title was unmarketable due to state appropriations for a highway. The defendants counterclaimed for specific performance. The New York Court of Appeals held that the defendants’ title was marketable because the state’s appropriation of land for highway purposes did not affect the right of access to the property and the contract did not stipulate that the appropriated parcels would be conveyed. The court emphasized that a marketable title is one free from reasonable doubt and does not require parol evidence to cure defects.

    Facts

    The Lanzas (defendants) contracted to sell a residential property to the Regans (plaintiffs). The property was described as “No. 29 Hoyt Place. Lot size approximately 21’ x 109’ x 207’ x 264’ as per deed to you * * * together with a two story stone and frame dwelling now thereon.” Prior to the contract, the State appropriated a triangular piece of the property for highway relocation. The Regans raised concerns about the effect of the appropriation on the marketability of the title.

    Procedural History

    The Supreme Court initially granted summary judgment to the Lanzes, dismissing the Regans’ complaint and ordering specific performance. The Appellate Division reversed, holding that a trial was required to determine if the title was marketable. After trial, the Supreme Court found in favor of the Lanzes, again ordering specific performance. The Appellate Division reversed again, finding the title unmarketable. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether the title to the property contracted to be conveyed by the Lanzes to the Regans was good and marketable.

    Holding

    1. Yes, because the State’s appropriation of land for highway purposes did not affect the right of access to the property and the parties did not intend the appropriated parcels to be conveyed.

    Court’s Reasoning

    The Court of Appeals reversed the Appellate Division, holding the Lanzes’ title marketable. The court defined a marketable title as one that can be freely resold or mortgaged to a reasonably prudent person. It noted that a buyer is assured a title free from reasonable doubt, but not every possible doubt. The court stated that “[t]he law assures to a buyer a title free from reasonable doubt, but not from every doubt” (Norwegian Evangelical Free Church v Milhauser, 252 NY 186, 190).

    The court emphasized that unless stipulated otherwise, a purchaser is entitled to a marketable title. However, a purchaser will not be compelled to take title when there is a defect in the record title which can be cured only by a resort to parol evidence or when there is an apparent incumbrance which can be removed or defeated only by such evidence.

    The court found that the State’s appropriation of a portion of the property for highway relocation did not impair access to Hoyt Place, a public street. When the State acquired the triangular parcel, it became part of the relocated Hoyt Place right-of-way, burdened with the usual right of access for abutting owners. “When lands abut upon a public street, there is appurtenant to such lands an easement of access over the public street, whether or not the abutting owner owns the fee of the street (Donahue v Keystone Gas Co., 181 NY 313, 316).” This closely resembled the situation in Dormann v. State of New York, where an appropriation for highway widening did not cut off access.

    The Court concluded that because the parties did not intend to convey the appropriated parcels and the property retained access to a public street, the title was marketable. The court found that the declaration from a state representative clarifying that the right of access was not taken in the appropriation only reaffirmed the existing legal status and did not constitute necessary parol evidence to cure a defect. Therefore, the Supreme Court’s judgment granting specific performance to the Lanzes was reinstated.