Supreme Court, Appellate Division, Third Department, New York.
PATTEN OF NEW YORK CORPORATION, Respondent,v.Richard P. GEOFFRION et al., Appellants.
May 20, 1993.
Purchaser brought action to recover payments made under contract for purchase of property after parties were unable to resolve dispute regarding marketability and insurability of vendors' title. The Supreme Court, Orange County, Miller, J., granted summary judgment for purchaser based on vendors' failure to deliver marketable and insurable title as required by contract, and vendors appealed. The Supreme Court, Appellate Division, Crew, J., held that: (1) purchaser's mere knowledge of utility easement did not defeat its right to object to marketability of title; (2) existence of unlocated burial reservations on property rendered vendors' title unmarketable; and (3) unwillingness of title insurance company to insure title without exception for utility easement established that vendors failed to fulfill their obligation to furnish insurable title.
 Vendor and Purchaser 130(.5)400k130(.5) Most Cited Cases
Under terms of contract for purchase of property, requiring such title as title company will insure and conveyance of fee simple free of all encumbrances, vendors must tender both marketable and insurable title.
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Purchaser did not waive objections to title for property by mere knowledge of utility easement; even assuming that utility easement was not material defect in vendors' title, existence of unlocated burial reservations, which were not excepted from contract, rendered vendors' title unmarketable by inhibiting development of property for residential use as intended by purchaser.
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Mere knowledge of utility easement did not defeat purchaser's right to object to marketability of title.
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"Marketable title" to property is good title, free and clear of encumbrances or material defects, and reasonably certain not to be called into question.
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Vendors failed to tender insurable title, as required by contract, where company was unwilling to provide insurance without exception for utility easement. **356 Kirschenbaum & Kirschenbaum (Samuel Kirschenbaum, of counsel), Garden City, for appellants.
Fabricant & Lipman (Alan S. Lipman, of counsel), Goshen, for respondent.
Before MIKOLL, J.P., and YESAWICH, MERCURE and CREW, JJ.
*1007 CREW, Justice.
Appeals (transferred to this court by order of the Appellate Division, Second Department) (1) from an order of the Supreme Court (Miller, J.), entered November 9, 1991 in Orange County, which granted plaintiff's motion for summary judgment, and (2) from the judgment entered thereon.
On or about November 24, 1987, the parties entered into a contract whereby plaintiff agreed to purchase from defendants approximately 117 acres of land located in the Town of Warwick, Orange County, for $1.5 million. At the time the contract was executed, plaintiff tendered a down payment in the amount of $150,000, to be held in escrow by defendants' *1008 attorney, [FN1] and thereafter paid additional sums totaling $10,240. The closing was set for January 9, 1989 but prior thereto, on or about December 19, 1988, plaintiff raised two objections to title--namely, a utility easement and two burial reservations. The parties were unable to resolve the dispute regarding the marketability and insurability of defendants' title, and plaintiff ultimately commenced this action seeking, inter alia, to recover the payments made under the contract. Following joinder of issue, plaintiff moved for summary judgment. Supreme Court granted plaintiff's motion, finding that defendants had failed to deliver marketable and insurable title as required by the contract. This appeal by defendants followed.
FN1. The contract was subsequently modified to provide for the release of this sum to defendants.
We affirm. The contract provided that defendants were to convey "the fee simple of the * * * premises, free of all encumbrances, except as [stated therein]", and that defendants were required to give, and plaintiff was required to accept, "a title such as any reputable title company, subject to the exceptions in this contract provided, [would] approve and insure". The contract further provided that the property was to be conveyed subject to, inter alia, "[a]ny state of facts an accurate survey may show, provided title is not thereby rendered unmarketable [and] [c]ovenants and restrictions, of record, if any, provided the same does not interfere with or prohibit the Purchaser's intended use". It appears that plaintiff intended to develop the property for residential purposes.
 We have previously held that where, as here, "the contract requires such title as a title company will insure and also requires conveyance of a fee simple free of all encumbrances save those specified in the contract, the buyer is entitled to insist on both insurable title and title which is free of all encumbrances save those specified in the contract" (Hudson-Port Ewen Assocs. v. Chien Kuo, 165 A.D.2d 301, 304-305, 566 N.Y.S.2d 774, aff'd, 78 N.Y.2d 944, 573 N.Y.S.2d 637, 578 N.E.2d 435; cf., Creative Living v. Steinhauser, 78 Misc.2d 29, 31, 355 N.Y.S.2d 897, aff'd, 47 A.D.2d 598, 365 N.Y.S.2d 987, lv. denied, 36 N.Y.2d 643, 368 N.Y.S.2d 1026, 329 N.E.2d 677). Thus, under the terms of the contract at issue here, defendants were required to tender both marketable and insurable title.
 Initially, we reject defendants' assertion that plaintiff waived any objections to title. Mere knowledge of the utility **357 easement did not defeat plaintiff's right to object to the marketability of title (see generally, Whitman v. Larson, 172 A.D.2d 968, 970, 568 N.Y.S.2d 485; Tanners Realty Corp. v. Ruggerio, 111 A.D.2d 974, 975, 490 N.Y.S.2d 73, lv. denied, 65 N.Y.2d 611, 494 N.Y.S.2d 1026, 484 N.E.2d 1053; but cf., *1009Ilemar Corp. v. Krochmal, 58 A.D.2d 853, 855, 396 N.Y.S.2d 676, aff'd, 44 N.Y.2d 702, 405 N.Y.S.2d 444, 376 N.E.2d 917). Turning to the merits, marketable title traditionally has been defined as "a good title, one that is free and clear of encumbrances or material defects, one reasonably certain not to be called into question" (91 N.Y.Jur.2d, Real Property Sales and Exchanges, § 71, at 164); in short, a title that is free from reasonable doubt and is readily subject to resale (see, Laba v. Carey, 29 N.Y.2d 302, 311, 327 N.Y.S.2d 613, 277 N.E.2d 641). Even assuming that the utility easement, which apparently runs along State Route 94 and borders a portion of the property's perimeter, does not constitute a material defect in defendants' title (but cf., Rhodes v. Astro-Pac, Inc., 41 N.Y.2d 919, 394 N.Y.S.2d 623, 363 N.E.2d 347; Atlas Realty of E. Meadow v. Ostrofsky, 56 Misc.2d 787, 289 N.Y.S.2d 784), the existence of the unlocated burial reservations, which were not excepted from the contract, surely would inhibit development of the property for residential use and, thus, renders defendants' title unmarketable.
 Moreover, the record indicates that defendants failed to tender insurable title as well. Under the terms of the contract, defendants were required to tender title such as any reputable title company, subject to the exceptions noted in the contract, would approve and insure. Although defendants' title insurance company was apparently willing to insure the title without an exception for the burial reservations, the company was unwilling to provide insurance without an exception for, inter alia, the utility easement. Thus, defendants failed to fulfill their obligation to furnish insurable title in accordance with the contract terms (see, Kopp v. Barnes, 10 A.D.2d 532, 204 N.Y.S.2d 860; compare, Laba v. Carey, 29 N.Y.2d 302, 327 N.Y.S.2d 613, 277 N.E.2d 641, supra; Westhab, Inc. v. McBain, 143 A.D.2d 1006, 533 N.Y.S.2d 771; De Jong v. Mandelbaum, 122 A.D.2d 772, 505 N.Y.S.2d 659).
ORDERED that the order and judgment are affirmed, without costs.
MIKOLL, J.P., and YESAWICH and MERCURE, JJ., concur.
598 N.Y.S.2d 355, 193 A.D.2d 1007
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