Lohmeyer v. Bower
170 Kan. 442, 227 P.2d 102 (1951)
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Rule of Law:
The violation of a restrictive covenant or a municipal zoning ordinance constitutes an encumbrance that renders a property's title unmerchantable. A purchaser's agreement to take title 'subject to all restrictions of record' does not obligate them to accept a title where there is a presently existing violation of those restrictions.
Facts:
- Carl and Anne Bower owned Lot 37 in the Berkley Hills Addition in Emporia, Kansas.
- A recorded 'Declaration of Restrictions' for the addition required any residence built on Lot 37 to be a two-story house.
- A City of Emporia ordinance required frame buildings to be erected at least three feet from the side or rear lot line.
- In August 1946, the Bowers moved a one-story frame house onto Lot 37.
- The house was placed approximately 18 inches from the north lot line, in violation of the city ordinance, and was a one-story house in violation of the restrictive covenant.
- On May 19, 1949, L. K. Lohmeyer entered into a contract with the Bowers to purchase the property.
- The contract stipulated that the Bowers would provide a 'good merchantable title' but noted the sale was 'subject, however,to all restrictions and easements of record applying to this property.'
- After executing the contract, Lohmeyer discovered both the ordinance and covenant violations and sought to be released from the agreement.
Procedural Posture:
- L. K. Lohmeyer sued Carl and Anne Bower in the district court of Lyon county (trial court), seeking to rescind a real estate contract.
- The Bowers answered and filed a cross-petition seeking specific performance of the contract.
- The trial court found for the Bowers and decreed specific performance of the contract.
- Lohmeyer, the plaintiff, appealed the trial court's judgment to the Kansas Supreme Court.
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Issue:
Does a violation of a city zoning ordinance and a private restrictive covenant render a property's title unmerchantable, thereby allowing the buyer to rescind the contract, even when the purchase agreement states the property is sold 'subject to all restrictions and easements of record'?
Opinions:
Majority - Parker, J.
Yes, the violations render the title unmerchantable. A marketable title is one free from reasonable doubt and does not expose the holder to the hazard of litigation. The court distinguishes between the mere existence of a restriction and an actual violation of that restriction. While a buyer may agree to purchase a property subject to recorded restrictions, this does not mean they agree to purchase a property that is already in violation of those restrictions. The existing violations of both the city ordinance (improper setback) and the private covenant (one-story house instead of two) are substantial defects that expose the buyer to potential lawsuits from the city or other landowners, thus making the title unmarketable. Therefore, the seller cannot deliver the merchantable title promised in the contract, and the buyer is entitled to rescind.
Analysis:
This case establishes a critical distinction in property law between the existence of a restrictive covenant and an active violation of one. The ruling clarifies that a standard contract clause making a sale 'subject to restrictions of record' does not waive the buyer's right to receive a marketable title free from the liabilities of an existing violation. This decision protects buyers from being forced to 'buy a lawsuit' and places the onus on sellers to ensure their property complies with all applicable regulations and covenants before conveying title. It solidifies the principle that a title is unmerchantable if it carries a risk of litigation, thereby reinforcing the buyer's right to rescind a contract in such circumstances.
