Property
Seller's Obligation to Deliver Marketable Title
1. Suppose that Mitchell signs a contract to purchase a home from Pinkel. [You can assume the contract is consistent with the form on page 792 in the book.] Mitchell obtains a title report from Community Title Company, which reveals the following issues:
a. The land is subject to a recorded "residential use only" restriction.
b. The land is subject to a recorded covenant that prohibits sale or other transfer of the land to anyone "not a member of the Caucasian race."
c. The land is subject to a recorded covenant that the owner may not have pets.
d. The land is subject to a recorded easement in favor of GTE.
e. A survey shows that Pinkel's fence encroaches onto the neighbor's adjoining land by as much as three feet.
f. The land is located in an R-1 residential zone. Under the applicable local zoning ordinance, only single-family residential use is permitted in an R-1 residential zone (and the zoning ordinance makes clear that a bed and breakfast is NOT a single-family residential use).
Which of these matters, if any, would permit Mitchell to refuse to close the transaction (i.e., to complete the purchase)? If you need additional information, what information would be relevant? Which of these title matters (if any) could Pinkel realistically "clear" (i.e., remove) prior to closing?
2. To what extent would your answers in Question 1 change if Mitchell planned not only to live in the home, but also to use the home as his law offices?
3. Suppose that Mitchell discovers, based on a title search, that Pinkel is not the record owner of the land (the last relevant deed for the land appearing on the public records shows title in Bert Smith). Pinkel responds by showing Mitchell a deed purportedly signed by Bert Smith conveying the land to Pinkel, 21 years ago. Pinkel never recorded the deed because it was not properly notarized, and so the local Recorder of Deeds refused to allow it to be recorded.
Pinkel also provides Mitchell with affidavits from both of Pinkel's next door neighbors. These affidavits state that Pinkel has been in possession of the land for the past 21 years.
When Mitchell refuses to close, Pinkel sues Mitchell for specific performance. Should the court compel Mitchell to perform, or should it allow him to cancel? Explain.
4. Suppose that Mitchell had signed a contract stating: "Seller agrees to deliver title subject to all recorded easements, covenants, conditions, and restrictions." Has Mitchell waived the Seller's obligation to deliver marketable title, or can Mitchell still object to recorded interests that would render title unmarketable? Explain.