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30. Must the buyer purchase the land?
The buyer no longer wants to purchase the land.
When the buyer conducted a title search for the land, she learned that the applicable zoning did not allow for her planned commercial use. She also discovered that there was a recorded restrictive covenant limiting the use of the land to residential use.
A seller and a buyer signed a contract for the sale of vacant land. The contract was silent concerning the quality of title, but the seller agreed in the contract to convey the land to the buyer by a warranty deed without any exceptions.
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Parties can contract for something less than «marketable title.» Quitclaim deeds transfer whatever title the grantor has to the grantee, even if that title is unmarketable. However, unless the parties specifically contract for this kind of conveyance, there will be an obligation to convey marketable title.
After the closing, the deed typically replaces the real estate contract as the embodiment of the parties' relationship. Under the doctrine of merger, most obligations imposed by the contract of sale are discharged unless they are repeated in the deed. For example, if a purchaser contracted for merchantable title but accepts a quitclaim deed, the purchaser would not be able to sue on the contractual provisions if the title turns out to be defective. The purchaser in this scenario would be limited to the provisions on the deed. Thus, real estate contracts are only relevant during the gap between its signing and the delivery of the deed.
A is correct. Unless the contract provides to the contrary, the law will imply that the seller will provide the buyer with a marketable title on the date of closing. A marketable title is not a perfect title but is title a court will force an unwilling buyer to purchase. A right held in the land by a third party, such as the right to enforce a restrictive covenant, renders the title unmarketable, and the buyer need not purchase the land.
B is incorrect. Although in some cases an existing violation of a zoning code may render title unmarketable, the mere existence of a zoning code does not render the title unmarketable or place a cloud on the title. Unless the contract provides to the contrary, the law will imply that the seller will provide the buyer with a marketable title on the date of closing.
C is incorrect. Unless the contract provides to the contrary, the law will imply that the seller will provide the buyer with a marketable title on the date of closing. However, after a buyer accepts the deed, the doctrine of merger prevents the buyer from raising the issue of marketability of title, and the buyer's remedy regarding title issues, if any, will be based on the deed. Here, it would not be conscionable to force the buyer to accept a deed less than what he contracted for because he has not yet accepted any deed yet.
D is incorrect. This contract was silent on the quality of title and therefore a marketable title will be implied. A marketable title is not a perfect title but is a title a court will require an unwilling buyer to purchase. A right held in the land by a third party, such as the right to enforce a restrictive covenant, renders the title unmarketable, and the buyer need not purchase the land.