## Facts

- A purchaser (G/GM Real Estate Corp.) contracted to buy a hotel from a seller (Susse Chalet Motor Lodge of Ohio, Inc.).
- The contract required the seller to deliver a limited warranty deed conveying fee simple title that was “good and marketable,” and free of mortgages or deeds of trust.
- A title search showed a recorded memorandum of lease in favor of a third party.
- The memorandum did not satisfy Ohio’s statutory recording requirements and, substantively, reflected a lease that had already lapsed.
- The purchaser sought confirmation that the lease had been cancelled and requested extensions of the closing date.
- The transaction did not close; the purchaser claimed the recorded memorandum made title unmarketable, while the seller asserted the purchaser failed to tender the purchase price.
- The trial court found the sale would have closed but for the purchaser’s failure to produce funds; the court of appeals reversed, treating the memorandum as a cloud that prevented delivery of marketable title.

## Issues

1. Whether a recorded memorandum of lease that was defectively recorded and reflected a lapsed, nonbinding lease renders title unmarketable under a contract requiring “good and marketable” title.
2. Whether the purchaser’s refusal or inability to tender the purchase price was a breach where the seller’s title obligation was satisfied despite the memorandum’s presence in the record.

## Decision

- The Supreme Court of Ohio reversed the court of appeals and reinstated judgment for the seller.
- The court held the memorandum of a lapsed lease, improperly recorded and not binding on the purchaser, did not render the seller’s title unmarketable.
- Because the contract required marketable (not cloudless) title and the alleged “defect” did not impair marketability, the purchaser was not excused from tendering the purchase price.
- The purchaser breached the contract by failing to tender the price at closing.

## Legal Principles

- A promise to convey “good and marketable” title does not require a title record free from every possible cloud; it requires freedom from defects that materially impair value or expose the buyer to a reasonable risk of litigation or loss.
- A recorded instrument that is not binding on the purchaser and does not evidence an enforceable adverse interest does not, without more, make title unmarketable.
- When the seller has met the contractual standard for title, a buyer’s failure to tender the purchase price constitutes breach rather than a justified refusal to perform.

## Conclusion

Under a contract calling for “good and marketable” title, an improperly recorded memorandum reflecting a terminated lease did not make the seller’s title unmarketable; the buyer therefore breached by failing to tender the purchase funds, and judgment for the seller was reinstated.


G/GM Real Estate Corp. v. Susse Chalet Motor Lodge of Ohio, Inc., 61 Ohio St. 3d 375, 575 N.E.2d 141 (Ohio 1991)