Brief Fact Summary. Plaintiffs purchased land that encroached upon state tidal wetlands. Upon discovery of this, Plaintiff sued for breach of the warranty against encumbrances.
Synopsis of Rule of Law. Latent violations of land use regulations that are not on land records, unknown to the seller and which no enforcement action has been taken against, do not constitute a breach of the warranty against encumbrances.
The elements of a cause of action for innocent misrepresentation are (1) a representation of material fact (2) made for the purpose of inducing the purchase, (3) the representation is untrue, and (4) there is justifiable reliance by the plaintiff on the representation by the defendant and (5) damages.View Full Point of Law
Issue. Whether an alleged latent violation of a land use statute or regulation, existing on the land at the time title is conveyed, constitutes an encumbrance such that the conveyance breaches the warranty against encumbrances.
Held. Reversed, the warranty against encumbrances has not been breached and the Plaintiff failed to prove innocent misrepresentation.
An encumbrance is defined as every right to or interest in the land, which may subsist in third persons, to the diminution of the value of the land, but consistent with the passing of the fee for conveyance.
Latent violations of land use regulations not on land records, are unknown to the seller and to which the state enforcement agency has taken no action to compel compliance at the time the deed was executed, do not constitute an encumbrance for the purpose of this warranty.
The Plaintiff has not met the burden of proving innocent misrepresentation since the Defendant had made no representation to the Plaintiff regarding the tidal wetlands.
Discussion. The court noted that as of yet, any damages the Plaintiff may suffer are speculative since the state agency in charge of enforcing the regulation was not taking any action against the Plaintiff. Further, the agency had directed the Plaintiff to seek an application asking for a waiver of violation, which the Plaintiff had not done. The court also ruled that the proper way for a party to be protected is to include protective language in the land purchase contract and insist on appropriate provisions in the deed.