Case Brief of Creative Living, INC., v. Elsie Steinhauser.

78 Misc.2d 29, 355 N.Y.S.2d 897

CREATIVE LIVING, INC., v. Elsie STEINHAUSER,

Purchaser brought suit to recover down payment and cost of title examination on theory that contemplated condemnation of the property rendered title unmarketable. The Supreme Court, Bronx County, Trial Term, Israel Rubin, J., held that in view of provision in purchase contract that vendor would deliver insurable title, vendor was not required to deliver marketable title, and, in any event, contemplated condemnation did not render title unmarketable.

The complaint was dismissed.

Creative Living Inc. retained a real estate broker to negotiate with the Ms. Steinhauser, for the purchase of property which she owned. A contract of sale was entered into on May 28, 1970, providing a purchase price of $80,000 and the sum of $8,000 was given to the defendant as a down payment pursuant to the contract. The date for closing was set for October 15, 1970. After the contract was entered into the plaintiff ordered and received a title search. The cost of this was $265. Prior to the closing date, Creative Living learned that the property was being considered for inclusion in the South Bronx Neighborhood Development Plan for the South Bronx Model Cities Area. A resolution of the Board of Estimate adopted July 23, 1970 found and proposed that the subject property should be acquired by the City of New York by condemnation. On October 15, 1970, the date for closing of title pursuant to the contract of sale, Creative Living failed to appear at the office of the attorneys for the Ms. Steinhauser for closing. It is conceded that the defendant was ready, willing and able to close title and to deliver an insurable title to the plaintiff. On February 11, 1971, title to the property vested in the City of New York in condemnation proceedings.

Creative Living now seeks a rescission of the contract and a return of its down payment and the cost of title examination solely upon the contention that proper title could not be conveyed by the defendant because of the proposed condemnation proceedings.

The controversy submitted for decision is whether or not, based upon the foregoing facts, plaintiff is entitled to judgment against the defendant in the sum of $8,265, representing its contract down payment and the cost of its title examination.

It appears from the papers submitted that a report of title free of any encumbrances which could not be ...

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It appears from the papers submitted that a report of title free of any encumbrances which could not be cleared at closing. The title report does not set forth any pending condemnation proceedings. City Title approved and was prepared to insure title to Creative Living. They agreed to accept a title approved and insured and that is what the seller was prepared to deliver on the closing date. This provision in the contract made the title company the final judge of title and when the title company was prepared to insure title in accordance with the contract no further requirement had to be met

It is up to the parties to a contract to agree to the kind of title to be conveyed. In the absence of agreement otherwise, a buyer is entitled to a ‘marketable title.’ This need not be expressly agreed but arises by implication from the contract. However, by contracting for an insurable title, the parties have abrogated the general rule.

Although the Court has found that all that was necessary was an insurable title, an interesting question presented in this case is whether the contemplated condemnation rendered title unmarketable.

However, mere preliminary steps or plans for the future appropriation of property does not constitute a defect or encumbrance rendering title unmarketable.

A condemnation occurring after the closing date will not relieve a vendee of liability under the contract to sell. Where a taking by eminent domain has not occurred prior to the date for closing a vendor has a right to damages for breach of contract.

The defendant is, therefore, entitled to a judgment dismissing the complaint.

N.Y.Sup. 1974.
Creative Living, Inc. v. Steinhauser,
78 Misc.2d 29, 355 N.Y.S.2d 897