Title: Bianchi v. Lorenz

State: vermont

Issuer: Vermont Supreme Court

Document:

Bianchi v. Lorenz (95-224); 166 Vt. 555; 701 A.2d 1037

[Filed 11-Jul-1997]    

  NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.

                            No. 95-224

Anthony and Nancy Bianchi                    Supreme Court

                                             On Appeal from
    v.                                       Chittenden Superior Court

Michael and Karen Lorenz                     January Term, 1996

Linda Levitt, J.

       Vincent A. Paradis and Daniel P. O'Rourke of Bergeron, Paradis,
  Fitzpatrick & Smith, Essex Junction, for plaintiffs-appellees

       Frank H. Langrock of Langrock Sperry & Wool, Burlington, for
  defendants-appellants

       PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.

       DOOLEY, J.   Defendants Michael and Karen Lorenz appeal from a
  judgment entered against them holding that a sale of property that was in
  violation of zoning laws breached the covenant against encumbrances in a
  warranty deed.  We affirm the judgment and hold that an encumbrance exists
  when the seller can determine from municipal records that the property is
  in violation of local zoning law at the time of conveyance and the
  violation substantially impairs the purchaser's use and enjoyment of the
  property.  We reverse the award of post-judgment interest and remand for
  recalculation.

       In 1986, defendants purchased a lot in the town of Jericho, Vermont. 
  In May 1987, defendants asked a state-certified site technician to design a
  septic system for the lot. They told the technician that they were planning
  to build a four-bedroom home, and the technician visited the site with
  Karen Lorenz's father, Maurice Begnoche, who was the building contractor. 
  After examining the soils, water table, grading and lot configuration, the
  technician designed a septic system for a three-bedroom home because the
  small lot size and other physical characteristics

 

  of the lot prevented the installation of a septic system large enough to
  service a four-bedroom house.  The technician delivered the plans to Mr.
  Lorenz and went over the design with him. The plan stated that the site
  technician should be notified and the system inspected before it was
  covered.

       In June 1987 defendants obtained a building permit.  The application
  provided that "[a]ll construction [was] to be completed in accordance with
  the Zoning Laws of the Town of Jericho and State of Vermont."  Jericho's
  zoning regulations require an owner of a newly constructed home to apply
  for a certificate of occupancy.  Jericho, Vt., Zoning Regulations § 1204(2)
  (1981).  The certificate will be issued only after the home is inspected
  and found to be in compliance with the building and septic permits.  The
  zoning regulations make it unlawful to use or occupy a building until
  issuance of a certificate of occupancy.  Id. § 1203(2).  Under 24 V.S.A. §§
  4444 and 4445, the Town has the authority to enforce its zoning laws
  through fines and injunctions.

       Defendants also obtained a septic permit from the Town of Jericho. 
  The permit stated that the septic system was "to be constructed in
  accordance with [the] design by [the site technician] . . . and inspected
  by her upon completion.  Written notice must be received by this office
  prior to issuance of an Occupancy Permit."

       Defendants relied upon their general contractor, Mr. Begnoche, to
  obtain all the necessary permits and to construct the home in compliance
  with the permit conditions. Defendants' general contractor built a
  four-bedroom house in place of a three-bedroom house, and did not follow
  the site technician's septic or grading plan.  Instead, the general
  contractor installed a substandard septic system with numerous defects and
  poor grading.  The completed septic system was never inspected by the site
  technician, and a certificate of occupancy was never issued.  Defendants
  were unaware of these zoning violations.

       In 1990, defendants listed their home for sale.  During negotiations
  with plaintiffs Anthony and Nancy Bianchi, defendants made no
  representations concerning the septic system

 

  or the lack of a certificate of occupancy.  In December 1990, plaintiffs
  purchased the home and received from defendants a warranty deed with a
  covenant stating that the property was free from every encumbrance.

       In the summer and fall of 1991, plaintiffs noticed that the portion of
  their backyard above the septic system contained grass that was unusually
  lush.  Plaintiffs noticed a fetid odor the following spring.  Shortly
  thereafter, septic effluent surfaced in their backyard.  Plaintiffs had
  their septic system inspected by an engineer, who told them that the system
  deviated from the site technician's plans.  The Jericho health officer
  informed plaintiffs that they would need to replace the septic system and
  obtain a certificate of occupancy to comply with the zoning laws.
  Plaintiffs incurred $38,415.00 in costs to replace the septic system and
  $2,804.00 in refinancing costs for their home; they expected to incur
  additional future costs to comply with conditions in the certificate of
  occupancy, which they eventually received.

       Alleging consumer fraud, negligence, and breach of warranty,
  plaintiffs sued to recover the cost of replacing the septic system.  Only
  the breach of warranty claim survived defendants' motion for directed
  verdict.(FN1)  After the close of evidence, the court found that defendants
  had breached the covenant against encumbrances in the warranty deed, and
  awarded plaintiffs damages for the costs incurred to replace the septic
  system.

       Defendants argue that a violation of a zoning ordinance does not
  constitute an encumbrance for purposes of the covenant against encumbrances
  in a warranty deed.  We disagree and hold that an encumbrance is present at
  least when the seller can determine from municipal records that the
  property violates local zoning regulations at the time of conveyance, and
  the violation substantially impairs the purchaser's use and enjoyment of
  the property.

       This case is governed by our recent decision in Hunter Broadcasting,
  Inc. v. City of Burlington, 164 Vt. 391,