## Facts

- SCM Corporation (later succeeded by HM Holdings, Inc.) agreed to sell used industrial real estate in Hammond, Indiana to Robert S. Rankin for $500,000 under an installment land contract.
- The price was to be paid in monthly installments with a balloon payment due in January 1990, later extended with a revised schedule through June 30, 1990.
- The contract warranted conveyance of marketable (merchantable) title, but a separate rider addressed the property’s condition and stated the sale was “as is”/“as is, where is.”
- The rider further stated the buyer had an adequate opportunity to inspect and accept the property and that the seller made no representations regarding the real estate or the buyer’s acquisition.
- Rankin failed to make the final four installment payments and failed to pay the first installment of 1989 real estate taxes.
- HM Holdings sued in federal district court to foreclose the land contract, obtain a personal money judgment, and order sale of the property.
- Rankin admitted default but asserted defenses and counterclaims alleging hazardous waste contamination breached the seller’s warranty of marketable title and excused payment.
- The district court dismissed Rankin’s amended counterclaim and granted judgment on the pleadings for HM Holdings; it later entered a foreclosure judgment and a personal money judgment against Rankin.

## Issues

1. Whether the contract’s “as is” and disclaimer language barred claims that hazardous waste contamination breached express or implied warranties regarding the property’s condition.
2. Whether hazardous waste contamination constitutes a title defect that makes title unmarketable under Indiana law, supporting a defense or counterclaim to foreclosure.

## Decision

- The Seventh Circuit affirmed the judgment on the pleadings and the resulting foreclosure and money judgment.
- The court held the contract contained no express warranty about the property’s physical or environmental condition and effectively disclaimed any implied warranties of condition through the rider’s “as is” language and no-representations clause.
- The court held that, under Indiana law, hazardous waste contamination is a condition defect, not a defect in ownership, and therefore does not prevent conveyance of marketable title.
- Because Rankin’s defenses and counterclaims failed as a matter of law, HM Holdings was entitled to foreclose and obtain a personal judgment for the unpaid amounts.

## Legal Principles

- Contractual “as is”/“as is, where is” provisions and clear no-representation clauses can disclaim implied warranties regarding the condition of real property, including environmental condition, absent contrary state-law limits.
- A warranty of marketable (merchantable) title concerns defects in ownership (such as liens, encumbrances, or adverse claims), not physical conditions of the land.
- Under Indiana law, environmental contamination on property, without more, does not constitute a defect in title that renders title unmarketable.
- Judgment on the pleadings is appropriate when the contract’s unambiguous terms allocate the risk of property condition to the buyer and the asserted defenses/counterclaims do not state a legally cognizable breach.

## Conclusion

The court enforced the land contract’s allocation of risk: the buyer took the used industrial property “as is,” and the seller’s title warranty was not converted into a warranty against environmental contamination. Because hazardous waste affected condition rather than ownership, it did not make title unmarketable under Indiana law, and the seller could foreclose and recover a personal judgment for the buyer’s payment default.


HM Holdings, Inc. v. Rankin, 70 F.3d 933 (7th Cir. 1995)