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40. Should the seller prevail?
After a title search, the buyer discovered that a restrictive covenant prohibited using the land for commercial purposes. The buyer had not had actual knowledge of the restrictive covenant before executing the contract. The buyer refused to close on the contract, and the seller has sued for specific performance.
A buyer entered into a valid written contract with a seller to purchase vacant land. Unbeknownst to the seller, the buyer planned to construct a gas station on the land. The contract provided that the buyer could rescind the contract if the seller failed to deliver marketable title.
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B is incorrect. The law requires the title to be marketable; it does not require that the seller deliver a perfect title.
C is incorrect. The restrictive covenant renders the title unmarketable since it was not excepted in the contract, and it allows a third party to prevent the buyer from using the land as desired. Therefore, the seller should not prevail.
D is incorrect. It is irrelevant that the seller did not know of the buyer's plans to construct a gas station. The contract provided that the buyer could rescind the contract if the seller failed to deliver marketable title.