Opinion ID: 1429037
Heading Depth: 1
Heading Rank: 4

Heading: encroachment as warranty violation

Text: This court set forth the general rule regarding a seller's misrepresentation of boundaries in Meeker v. Lanham, Wyo., 604 P.2d 556, 559 (1979), stating: With regard to the boundary lines, the rule regarding misrepresentations concerning the boundaries of property, is correctly pointed out to us by the appellant: `A purchaser has the right to rely upon the representations of the seller as to the boundaries of the land, and if the seller misrepresents the true boundary of the land, whether innocently or intentionally, it is ground for rescission by the purchaser.' From Buyers' contentions we discern their three claims of false representations to have been made by Sellers as covenants in the contractual documents: first, that title was merchantable (marketable); [1] second, that property was in compliance with the relevant city ordinance; and third, that there were no known defects in title or condition. The representation that there were no defects overlaps with the representation that title was marketable, and consequently our discussion of the two representation claims is combined in first addressing the question whether the encroachments (defects) rendered the title unmarketable. The Montana Supreme Court has stated: `The term marketable title is difficult of definition ... The most practical test is as to whether the title is such that a third person may reasonably raise a question after the time the contract would have been completed. If the conditions of the title warrants such an attack, the purchaser may reject the title as unmarketable.' McCarthy v. Timberland Resources, Inc., Mont., 712 P.2d 1292, 1294 (1985), quoting from Silfvast v. Asplund, 93 Mont. 584, 20 P.2d 631, 637 (1933). Similarly, the uniform rule regarding marketability has been explained in an Oregon decision: A purchaser is not required to accept title which might reasonably be expected to involve litigation. `[I]f there is doubt and uncertainty about the title sufficient to form the basis for litigation,    it cannot be thrown upon the purchaser to contest that doubt   .' Cameron v. Benson, 57 Or. App. 169, 643 P.2d 1360, 1363 (1982), rev'd on other grounds, 295 Or. 98, 664 P.2d 412 (1983), quoting from Wollenberg v. Rose, 45 Or. 615, 78 P. 751 (1904). See also Medallion Homes, Inc., v. Thermar Investments, Inc., Texas App., 698 S.W.2d 400, (1985); and Glaser v. Minnesota Federal Savings and Loan Association, Minn.App., 389 N.W.2d 763 (1986). There is also overwhelming authority for the proposition that title is unmarketable where it cannot be readily sold to a reasonably prudent person, familiar with the facts. Wilson v. Fenton, Iowa, 312 N.W.2d 524 (1981); Vazquez v. Davis, La. App., 466 So.2d 671, writ denied 468 So.2d 574 (1985); Madhavan v. Sucher, 105 Mich. App. 284, 306 N.W.2d 481 (1981); Glaser v. Minnesota Federal Savings and Loan Association, supra; Tedco Development Corp. v. Overland Hills, Inc., 200 Neb. 748, 266 N.W.2d 56 (1978); Belrose v. Baker, 121 N.H. 48, 426 A.2d 454 (1981); Brown v. Herman, 75 Wash.2d 816, 454 P.2d 212 (1969). Whether title to real estate is marketable is a question of law for the court. Wilfong v. W.A. Schickedanz Agency, Inc., 85 Ill. App.3d 333, 40 Ill.Dec. 625, 406 N.E.2d 828, (1980); Myerberg, Sawyer & Rue, P.A. v. Agee, 51 Md. App. 711, 446 A.2d 69 (1982). In this case, the fence encroached approximately 17 feet into the city street, the garage encroached approximately eight feet, and the actual residence encroached approximately four feet. Clearly, such substantial encroachments subjected Buyer to potential litigation involving the purchased property. Furthermore, a reasonably prudent person familiar with the nature and extent of these encroachments would decline to purchase at an otherwise reasonable market price. Accordingly, we find that the title was unmarketable. See Chesapeake Homes, Inc. v. McGrath, 249 Md. 480, 240 A.2d 245 (1968). In analagous situations numerous courts in other jurisdictions have found title unmarketable, and have granted buyers of realty the right to rescind their purchase agreements. In Zatzkis v. Fuselier, La. App., 398 So.2d 1284, writ denied 405 So.2d 533 (1981), the conveyed property encroached onto neighboring property. The gutter encroached six inches; the roof encroached two feet; and the step and fence encroached eight-tenths of a foot. That court held that the encroachments rendered title to the property unmarketable, and allowed the purchaser to rescind. Likewise, in Morrison v. Fineran, La. App., 397 So.2d 838 (1981), it was held that a fence which encroached onto neighboring property for a distance at the front of 0.31 feet gradually increasing to 1.24 feet at the rear rendered title unmarketable, and the prospective purchaser was permitted to reject the sale. Similarly in Kempff v. Morgan, La. App., 291 So.2d 520 (1974), overruled on other grounds by Lanusse v. Gerrets, La. App., 357 So.2d 45 (1978), the property in question included a fenced backyard with a deck and dressing rooms for a swimming pool. A survey of the property revealed that: 1. There was a five foot servitude inside of and adjacent and parallel to the rear property line. 2. The dressing rooms had been built on the servitude. 3. The wooden fence extended an additional 10.7 feet beyond the rear property line. 4. The wooden patio had been constructed entirely upon the 10.7 feet to which sellers had no title. 5. The roof of the dressing rooms overhung the property line by 0.9 feet. 6. The improvements were constructed in violation of several portions of the Jefferson Parish Zoning Ordinances. 291 So.2d at 522. That court held that the title was unmarketable because it suggested future litigation, and ordered the seller to return the prospective purchaser's deposit. See also LaVenia v. National Business Consultants, Inc., La. App. 83, 425 So.2d 840, 844 (1982), writ denied 432 So.2d 269 (1983). In Young v. Stevens, 252 La. 69, 209 So.2d 25 (1967), where a fence encroached ten inches, tapering down to three inches onto the adjoining lot to the rear of the property, and encroached six inches onto the adjoining property on the side, the Louisiana Supreme Court concluded that the title was not merchantable, and permitted the purchaser to rescind the contract. That court stated:    [A] person buying property whose improvements encroach upon his neighbor is likely to sustain a law suit to defend his right to possession of the property sold to him beyond his title. [Citations.]    What makes the title unmerchantable    is not necessarily the extent of the encroachment, but the fact that it suggests litigation. 209 So.2d at 28. In Wertheimer v. Byrd, 278 Minn. 150, 153 N.W.2d 252 (1967), where the purchase agreement failed to mention the existence of an easement, the court held that: An outstanding easement makes title to realty unmarketable in a situation where the title to be conveyed as specified in the contract to purchase has not been made subject to such easement. 153 N.W.2d at 253. The decision affirmed the trial court's finding as a matter of law that the purchaser was entitled to rescind the purchase agreement. In Rhodes v. Astro-Pac, Inc., 51 A.D.2d 656, 378 N.Y.S.2d 195 (1976), aff'd 41 N.Y.2d 919, 394 N.Y.S.2d 623, 363 N.E.2d 347 (1977), it was said:    Since the easement over defendant's property in favor of the adjoining landowner was an encumbrance which rendered the seller's title unmarketable [citation], and it was an encumbrance which had not been excepted by the seller's agreement to convey marketable title, the seller breached its contract and the purchaser is entitled to [the return of his down payment]. 378 N.Y.S.2d at 197. Carrick v. Gorman, 232 Ark. 729, 340 S.W.2d 377 (1960), is factually similar to this case: The undisputed evidence shows that Gorman's title is not merchantable. Two surveyors testified that the brick wall of the hotel building encroaches upon the adjoining land, some of which is owned by the United States. It goes almost without saying that in this situation the seller's title is not merchantable. 340 S.W.2d at 379. The case of Dukas v. Tolmach, 2 A.D.2d 57, 153 N.Y.S.2d 392 (1956), presents a strikingly similar fact pattern. That court stated: The claim of unmarketability is based upon the following: 1. A stone retaining wall, lawn and plantings alleged to encroach (from 2 ¾ inches to 16 feet 2 ¾ inches) on a city owned street. 2. Another stone retaining wall alleged to encroach on the street to the extent of 17 feet 1 ½ inches. 3. An access ramp or driveway alleged to encroach about 17 feet on the street. 4. A stairway, consisting of stone and masonry steps, walls and landing providing ingress and egress to the property, alleged to encroach more than 17 feet on the city street.       The question posed therefore is whether under these facts (the so-called encroachments being clearly established by the evidence) defendant's title is marketable. We think it is not. A purchaser may not be compelled to accept a title which will subject him to a lawsuit or which will require him to expend substantial sums of money in order to comply with the law [citations]. 153 N.Y.S.2d at 394. We agree with the reasoning found in these cases, and think it is unquestionably applicable to the situation in this case. Where improvements to realty encroach onto adjoining property, exposing the buyer to a reasonable possibility of litigation, title to the property is unmarketable as a matter of law. As further authority for our finding that the encroachments rendered title unmarketable, we also approve the following general statements: In the absence of any particular agreement or stipulation in regard thereto, the vendee in a contract for the sale of land is entitled to have the walls of the building, or buildings, upon the land which he has contracted to purchase stand completely upon the land conveyed, and where they encroach to a substantial extent upon adjoining premises, the title to the land to be conveyed is unmarketable. 77 Am Jur 2d Vendor and Purchaser § 218, p. 395. Encroachment of structures on or over a public way may render title to the property unmarketable depending largely upon the character and extent of the encroachment and the laws of the municipality wherein the property lies. A vendor does not have a marketable title if his building encroaches upon the public streets to such an extent as to threaten the vendee    with a burdensome expense in altering the building to meet the requirements of the law. 77 Am Jur 2d Vendor and Purchaser § 219, pp. 396-397. Under the city ordinance, maintenance of the encroachments was unlawful, and irrespective of any failure to enforce it, the ordinance could require removal. In order to move the buildings and fence to conform to the requirements of the city ordinance, the buyers were faced with a burdensome expense. The testimony at trial described the work as costing many thousands of dollars. The text of the Sheridan city ordinance and the potentially substantial expense to obtain compliance supports a determination of unmarketability of title. See McFarland v. Cobb, Mo., 64 S.W.2d 931 (1933); Pamerqua Realty Corporation v. Dollar Service Corporation, 93 A.D.2d 249, 461 N.Y.S.2d 393 (1983); Moyer v. DeVincentis Construction Co., 107 Pa.Super. 588, 164 A. 111 (1933). This court agrees with the rule as stated in Pamerqua, supra:    [W]here the contract contains a provision whereby the seller warrants and represents that, upon purchase, the property and its structures will not be in violation of any zoning ordinance or regulation    [and] where it reasonably appears that the vendee will be plagued by zoning problems when he purchases the property, a title defect does exist and the vendee is entitled to demand that the vendor rectify the same or return any moneys paid on account [citation]. 461 N.Y.S.2d at 395. Where, contrary to a seller's covenant of merchantability, title to realty is unmarketable, a buyer, Bethurems in this case, is entitled to rescission. Shaffer v. Earl Thacker Co. Ltd., 3 Hawaii App. 81, 641 P.2d 983 (1982); Myerberg, Sawyer & Rue, P.A. v. Agee, supra; McCarthy v. Timberland Resources, Inc., supra, 712 P.2d 1292; Carrick v. Gorman, supra, 340 S.W.2d at 379.