Property- Marketable Title
What is the marketable title rule
A title to real estate is unmarketable if it exposes the party holding it to the hazard of litigation To render it unmarketable: The defect of which the purchaser complains must be of substantial character and one from which he may suffer injury o Must diminish the quantity, quality, or value of the property contracted for.
What was the Lohmeyer v Bower case about
A zoning ordinance that made title unmarketable
Lohmeyer v Bower facts (Just try to memorize and know it was for marketable titie).
Dr. Lohmeyer (plaintiff) contracted to purchase property from the Bowers (defendants). The deed that transferred with the sale warranted (among other things) that the property was transferred "free and clear of all encumbrances," but "subject to all restrictions and easements of record applying to this property." Lohmeyer had a lawyer examine the title, and determined that two zoning violations existed on the lot: the house situated on the lot was only one story high, whereas the regulations required that all houses be two stories in height; and it was situated too close to the border of a neighboring lot. After Lohmeyer informed Bowers of the violations, Bowers offered to purchase and convey additional land behind the house (correcting the second violation), but Lohmeyer refused. . The trial court ruled in favor of the Bowers and ordered specific performance. Lohmeyer appealed.
What are common things to make title unmarketable
Easements and covenants
What happens if someone dies before closing?
If equitable conversion has occurred, seller's interest is personal property (right to purchase price) and buyer is treated as the owner of the land
What is the definition of marketable title
Marketable title is (1) A title (2) not subject to such reasonable doubt as would create a just apprehension of its validity in the mind of a reasonable person, (2) guided by competent legal advice,(3) would be willing to take and for which they would be willing to pay fair value.
What is the restrictions rule
Restrictions on use of land, like the restriction to have a 2-story house, are usually considered burdens on title to render it unmarketable
What is the risk of loss used for?
Risk of loss is used to decide who bears the loss when the property is destroyed between the signing and closing of the property
What made the title unmarketbale in Lohmeyer v Bower
The fact that the property violated the restrictions in the zoning ordinances and not the regulations themselves.
What is the RULE from Lohmeyer v Bower
The purchaser of real property may choose to cancel the sale if the title to the land is found to be unmarketable.
What is equitable conversion
Upon the signing of the contract and before the closing: Buyer: Has actual ownership of money Has equitable ownership of property Seller: Has actual ownership of property Has equitable ownership of money
Can certain restrictions be waived in a contrcat
Yes, certain restrictions can be waived and the type of deed accepted plays a role into whether title is unmarketable
If the party is unable to convey marketable title may the buyer rescind
Yes, this is an implied condition in land contracts,