Brief Fact Summary. Plaintiffs made an offer to purchase property from Defendant at the price of $6,300.00. The Plaintiffs’ attorney found that the title abstract showed that a prior series of conveyances made the title unmarketable.
Synopsis of Rule of Law. A title may be regarded as unmarketable if a reasonably careful and prudent man, familiar with the facts, would refuse to accept title in the ordinary course of business. It is not necessary that the title be actually bad in order to render it unmarketable. It is sufficient, if there is such a doubt or uncertainty as may reasonably form the basis of litigation.
Facts. Plaintiffs made an offer to purchase property from Defendant at the price of $6,300.00 with the sum of $200.00 down to apply towards the purchase price. This was to be returned should the acceptance be rejected by the vendor, or if there was a prior sale of the property, or should the title be found to be unmarketable. The Plaintiffs’ attorney found that the title abstract showed that a prior series of conveyances made the title unmarketable. In 1922, the property was conveyed to Hickey and Eppinga by warranty deed. In January 1923 the property was conveyed by warranty deed by Hickey and Eppinga to a bank . By quitclaim deed dated December 28, 1927, but not recorded until January 7, 1928, Eppinga quitclaimed his interest to Hickey. A quitclaim deed dated December 29, 1927, but not recorded until January 10, 1928, was from the bank to Hickey and Eppinga. Plaintiffs’ attorney concluded that the title was unmarketable in the sense that Eppinga could make a claim for an undivided
one-half interest in the property. The Defendant’s son tried to get Eppinga to sign a quitclaim deed to clear the potential problem, but Eppinga could not be bothered. The Plaintiffs then sued for specific performance seeking a conveyance of the property, and require Defendants to take affirmative action to remedy the defect in title. The trial court found that the Plaintiffs were not entitled to such relief. Plaintiffs appealed.
Issue. Are the Plaintiffs entitled to specific performance requiring the Defendant to remedy the defect of title?
Held. No. Plaintiffs’ complaint should be dismissed without prejudice so that they can pursue a suit at law for the recovery of damages.
A title may be regarded as unmarketable if a reasonably careful and prudent man, familiar with the facts, would refuse to accept title in the ordinary course of business. It is not necessary that the title be actually bad in order to render it unmarketable. It is sufficient if there is such a doubt or uncertainty as may reasonably form the basis of litigation.
A purchaser of property entitled to “marketable title” may not be required to accept a conveyance if the title is in such condition that he may be required to defend litigation challenging his possession and interest.
In this case, specific performance must be denied because the Plaintiffs are effectively asking the court to enter an order compelling Defendant to remedy the alleged defect by obtaining a conveyance from Eppinga or suing to quiet title for the purpose of conveying clear title to the Plaintiffs.
The equitable remedy of specific performance is not one of right, but rather rests in the sound discretion of the court.
Discussion. This defect appears to be trivial, however, if the alleged defect may form a good faith basis for a suit by Eppinga, then the title is said to be unmarketable. There is no requirement that Eppinga actually be able to win a suit on his interest, only that he bring a suit on a good faith basis.