## Facts

- Bryan R. and Linda P. Wilcox contracted with Pioneer Homes, Inc. in November 1974 to purchase a newly constructed house and lot for $52,000.
- The contract required Pioneer to convey “good and marketable title, free of all encumbrances, by warranty deed.”
- Pioneer delivered a warranty deed on May 1, 1975, warranting title free of encumbrances.
- In 1976, during an attempted resale, a survey showed the lot was narrower than the deed description suggested and the house sat about five feet from the true side lot line.
- The house’s location violated (1) a Hope Mills ordinance requiring a 15-foot side-yard setback and (2) a subdivision restrictive covenant requiring a seven-foot side-yard setback.
- To complete the resale, the Wilcoxes bought an adjoining strip of land for $1,500 and conveyed it to their purchaser to cure the violations.
- The Wilcoxes sued Pioneer to recover $1,500 as damages for breach of the deed’s covenant against encumbrances.

## Issues

1. Whether an existing violation of a municipal side-yard setback ordinance (and related restrictive covenant) at the time of conveyance constitutes an encumbrance within a warranty deed’s covenant against encumbrances.

## Decision

- The North Carolina Court of Appeals reversed summary judgment for Pioneer Homes.
- The court held that an existing violation of the setback ordinance at the time of conveyance constitutes an encumbrance under the covenant against encumbrances.
- The court concluded the trial court erred by treating a violation as equivalent to the mere existence of a public regulation.

## Legal Principles

- An “encumbrance” includes any burden or charge on land, including rights existing in another that restrict the owner’s use of the property.
- The mere existence of public land-use restrictions enacted under the police power (such as zoning or similar regulations) is not, by itself, an encumbrance for purposes of a covenant against encumbrances.
- An existing violation of such a restriction at the time of conveyance is an encumbrance because it burdens the property, restricts use and marketability, and may require corrective expenditures or expose the owner to enforcement consequences.
- A grantor breaches the covenant against encumbrances when the property, as conveyed, is subject to an existing ordinance or covenant violation requiring cure.

## Conclusion

The court held that while public land-use regulations are not themselves encumbrances, a present violation of those regulations at the time of deed delivery is an encumbrance that can support damages for breach of the covenant against encumbrances, and it reversed summary judgment for the builder.


Wilcox v. Pioneer Homes, Inc., 41 N.C. App. 140, 254 S.E.2d 214 (N.C. Ct. App. 1979)