Laba v. Carey

Laba (plaintiff) contracted to buy Carey's (defendant) property, with the sale conditioned on Carey delivering title free of encumbrances except those the contract specifically noted, including recorded 'covenants, restrictions, utility agreement and easements' as long as they hadn't been violated. A title search revealed a recorded telephone easement and a 'Waiver of Legal Grades' covenant requiring a future sidewalk upgrade whenever the Commissioner of Highways ordered it, though the existing below-grade sidewalk (shared with all surrounding properties) had never actually triggered a violation of either the easement or the covenant. When a dispute arose over whether the existing tenant needed to vacate before closing, Laba refused to close at all, now arguing the easement and covenant made Carey's title unmarketable. Laba sued to recover his deposit and fees; the trial court dismissed his complaint, the appellate division reversed without awarding fees, and Carey appealed.