## Facts

- Purchasers contracted to buy real property in Woodside, New York, from the seller under a written agreement.
- The contract required the seller to convey title “such as any reputable title company would approve and insure.”
- The contract stated the conveyance would be free of encumbrances except those noted, and “subject to” recorded covenants/restrictions and easements, if not then violated.
- The purchasers hired a reputable title company to search and insure title.
- The title search disclosed a recorded telephone easement and a recorded “Waiver of Legal Grades” covenant requiring sidewalk installation to legal grade if directed by the Commissioner of Highways.
- The sidewalk grade was below legal grade, but there was no present violation of the easement or the covenant and no shown governmental enforcement action.
- The title company indicated the seller had good, marketable title and would insure, but it excluded the easement and covenant from coverage as exceptions.
- Relying on (i) survey information about sidewalk grade irregularities and (ii) the insurance exceptions, the purchasers rejected the deed and sued to recover their deposit and related title/survey expenses (and sought counsel fees).

## Issues

1. Whether the seller breached the contract by tendering title that a reputable title company would insure only with exceptions for recorded easements and restrictive covenants that the contract made the sale “subject to,” provided they were not violated.
2. Whether survey-shown sidewalk grade conditions, together with the recorded “Waiver of Legal Grades” covenant, rendered title unmarketable under a clause accepting survey-revealed conditions unless they rendered title unmarketable.
3. Whether purchasers could recover counsel fees under the contract given the disposition of their title objections.

## Decision

- The Court of Appeals reversed the Appellate Division and reinstated judgment for the seller.
- The seller satisfied the contractual requirement by tendering title a reputable insurer would approve and insure, even though the insurer excepted the recorded easement and covenant from coverage.
- The recorded easement and “Waiver of Legal Grades” covenant, not being violated and being expressly within the contract’s “subject to” provisions, did not make title unmarketable.
- The survey-revealed sidewalk grade conditions were treated as ordinary incidents of city property ownership and, absent a present violation or concrete interference with ownership/use, did not render title unmarketable.
- Because the purchasers were not entitled to rescind or recover the deposit, there was no basis for counsel fees.

## Legal Principles

- A real-estate contract requiring title “such as any reputable title company would approve and insure” is satisfied when a reputable insurer will insure title consistent with the contract’s allocation of risk.
- “Subject to” clauses for recorded easements and restrictive covenants (conditioned on no present violation) require the purchaser to accept those recorded burdens as part of the bargained-for title.
- The existence of standard recorded easements/covenants, not presently violated and expressly accepted by contract, generally does not render title unmarketable.
- Survey-disclosed physical conditions do not render title unmarketable absent a showing of a present legal violation or a material burden on ownership or use under the contract’s marketability standard.
- Contract provisions must be read together so that the title-insurance standard and “subject to” exceptions are harmonized rather than treated as conflicting.

## Conclusion

The court held that the seller complied with the contract by tendering a title a reputable company would insure, notwithstanding insurance exceptions for recorded, unviolated easements and covenants that the contract expressly accepted “subject to,” and that ordinary sidewalk-grade conditions shown by survey did not make title unmarketable.


Laba v. Carey, 29 N.Y.2d 302, 277 N.E.2d 641 (N.Y. 1971)