Buffalo Academy of the Sacred Heart v. Boehm Bros.

Brief Fact Summary.

The New York Court of Appeals ruled that when a buyer of real property purchases a tract of land that was originally a subdivided piece of a larger tract of land and the owner of the large tract of land was the same grantor for all of the smaller tracts of land subdivided from the large tract, then the purchaser is not bound by any restrictive covenants the common grantor gave to other grantees who received a smaller subdivided tract of land, unless the grantee had actual notice or the restrictive covenant would appear in a chain of title search. 

Synopsis of Rule of Law.

A buyer of real property who purchases a tract of land that was originally a subdivided piece of a larger tract of land and the owner of the large tract of land was the same grantor for all of the smaller tracts of land subdivided from the large tract, then the purchaser is not bound by any restrictive covenants the common grantor gave to other grantees who received a smaller subdivided tract of land, unless the grantee had actual notice or the restrictive covenant would appear in a chain of title search.

Facts.

The Boehm Brothers (Defendant) received title to several lots in real estate to compensate for a debt owed to the Defendants by Buffalo Academy of the Sacred Heart (Plaintiff). As a precautionary measure, the Defendants stipulated in the contract for sale that if the title were unmarketable at closing then the Plaintiff would pay the Defendants the sum of $60,000. Plaintiff offered a deed, however the Defendants refused because they believed the title to be unmarketable. The Defendants belief of unmarketable title was supported by their opinion that the land was subjective to several restrictive covenants including that the land could only be used for residential buildings and that the land cannot be used for a gasoline station. They base their belief on deeds from the same grantor to other grantees who received a piece of land from the original large tract that was subdivided into smaller tracts of land. Plaintiffs brought suit to compel performance. The Trial Court determined the Plaintiff’s did not have marketable title because of a restrictive covenant and ruled in favor of the Defendants awarding them $60,000. 

Issue.

Does marketable title exist when a buyer of a tract of land that was subdivided from a larger tract of land owned by the same grantor if previously recorded deeds through the same grantor include separate covenants restricting certain actions that only apply to specific tracts of land, and the buyer has no notice of these covenants? 

Held.

Yes. A buyer of a subdivided tract of land form a larger piece of land shared by the same grantor is not bound by other covenants apparent in other subdivided pieces of land unless the buyer is on actual notice or could have seen the covenants in a normal chain of title search. Trial court reversed and sale is enforced. 

Discussion.

The court emphasizes that a buyer of land is only subject to covenants if it is expressly written in their contract or deed, or if the buyer is on actual notice, or if the buyer is able to reveal a covenant through a chain of title search.