## Facts

- Bradley and Mary Yohe owned a tract of land in Freedom Township, Pennsylvania.
- The local zoning/land-development rules required a private access road of a certain width, but the Yohes wanted to build a narrower gravel right-of-way.
- In 1993, the Yohes obtained a township variance allowing a 16-foot-wide gravel right-of-way that did not meet the ordinance’s width requirement.
- The variance included express limits:
  - it applied only while the Yohes owned the entire parcel shown on the land development plan;
  - it did “not extend to subsequent owners”; and
  - it became void if the land was subdivided to create more than three residential building lots, after which the road would need to comply with the ordinance.
- The Yohes subdivided the tract and sold one subdivided parcel, Lot 2, to Peter and Anne Scott.
- Lot 2’s access depended on the gravel right-of-way running through the Yohes’ retained land (Lot 1).
- After the sale to the Scotts, the retained Yohe land was further subdivided, resulting in four residential lots on the original tract.
- In 2006, Stephen and Nancy Hoke Turner entered into an agreement to buy the Scotts’ property (Lot 2) for about $1.25 million, and they paid a deposit into escrow.
- The sales contract required the Scotts to convey “good and marketable” title.
- During investigation of the property, the Turners learned of the 1993 variance and its nontransferability and termination conditions, and they concluded the right-of-way was nonconforming without reliable legal protection.
- The Turners refused to close, asserting that the Scotts could not deliver marketable title because the township could require the road to be widened or could take enforcement action.
- The Scotts sued for breach of contract, and the Turners counterclaimed for return of their deposit.
- The federal district court granted summary judgment to the Turners and ordered the deposit returned; the Scotts appealed to the Third Circuit.

## Issues

1. Did the Scotts fail to provide “good and marketable” title under Pennsylvania law where access to the property depended on a nonconforming right-of-way and the variance permitting it had terminated by its own terms?
2. If the title was unmarketable, were the Turners excused from closing and entitled to recover their deposit?

## Decision

- The Third Circuit affirmed the grant of summary judgment for the Turners.
- The court agreed that, based on the variance’s written conditions and the later subdivision creating more than three residential lots, the variance had terminated and did not protect subsequent owners.
- Because the access road remained nonconforming without a valid variance, the buyer faced a real possibility of township enforcement or litigation to compel compliance with the road-width ordinance.
- That risk made the title unmarketable under Pennsylvania law and the contract’s “good and marketable” title requirement.
- The Turners were therefore justified in refusing to close and were entitled to the return of their deposit.

## Legal Principles

- Marketable title under Pennsylvania law is title a reasonable purchaser, informed of the facts and legal consequences, would accept; it must be free from reasonable doubt.
- Title is not marketable if it exposes the purchaser to a substantial risk of litigation or governmental enforcement action affecting the property’s use or requiring immediate corrective work.
- A zoning variance governed by express written conditions ends according to those terms; a purchaser may treat the loss of that protection as a defect affecting marketability when noncompliance remains.
- Informal municipal statements or meeting minutes suggesting a willingness to overlook a defect do not necessarily remove the legal risk that enforcement could occur later.

## Conclusion

Because the only access to the Scotts’ property depended on a right-of-way that did not comply with the township ordinance and the recorded variance authorizing that noncompliance had ended under its stated conditions, the Turners faced a substantial risk of enforcement or dispute. The Third Circuit held that this risk rendered the title unmarketable, excused the Turners from closing, and entitled them to return of their deposit.


Scott v. Turner, 345 F. App'x 761, 2009 WL 2965006 (2009)