"To render the title to real estate unmarketable, the defect of which the purchaser complains must be of a substantial character and one from which he may suffer injury. Mere immaterial defects which do not diminish in quantity, quality or value the property contracted for, constitute no ground upon which the purchaser may reject the title. Facts must be known at the time which fairly raise a reasonable doubt as to the title; a mere possibility or conjecture that such a state of facts may be developed at some future time is not sufficient."
Lohmeyer v. Bower
Plaintiff entered into a contract to purchase a lot, but then discovered that the house thereon was closer to the boundary than city ordinances permitted and that it was a one-story house when only a two-story house was permitted on the lot by a dedication declaration. Plaintiff sued to rescind the contract, which guaranteed that the title would be merchantable but subject to all restrictions and easements off record and giving defendants time to correct the defects.
Was the property subject to encumbrances making the title unmerchantable and if so were they excepted?
- Municipal restrictions do not render a title unmerchantable, but private restrictions on what may be built on land do. Page 760, Paragraph 2–3
- Page 761, Top
While the existence of the restrictions does not make the property unmarketable, the violations of both the city ordinances and the dedication declaration encumber the title and make it unmarketable. His knowledge of the restrictions does not stop him from rescinding the contract upon discovering that the house was in violation thereof. To hold otherwise would force plaintiff to buy a lawsuit.
Defendants may be able to remedy their violation of the city ordinance by buying additional ground, but they could not remedy the dedication declaration without making the house something that plaintiff did not buy.
The violations of the restrictions made the title unmerchantable without exception. Reversed.