Nelson v. Anderson
Illinois Appellate Court
676 N.E.2d 735 (1997)
Nelson (plaintiff) contracted to sell his home to Anderson (defendant), promising a warranty deed conveying marketable title free of undisclosed encumbrances. A title search revealed the house violated a subdivision-wide restrictive covenant requiring a ten-foot setback from adjoining lot lines. Nelson obtained the title insurer's written assurance it would insure the defect for Anderson and future buyers, but Anderson refused to close and bought elsewhere; Nelson resold at a lower price and sued for damages, while Anderson counterclaimed for his deposit. The trial court granted Anderson summary judgment, finding Nelson had failed to deliver unencumbered title, and Nelson appealed.
Whether a violation of a restrictive covenant renders title unmarketable, and whether insuring against a title defect cures that defect.