Adeveloper subdivided a 25-acre tract of land into 100 quarter-acre lots. on each lot she built a two-unit townhouse. the deeds to each of the purchasers contained a covenant that "the grantee, his heirs and assigns" would use the property only for single-family use. all deeds were promptly and properly recorded. subsequently, the zoning laws were amended to allow multifamily use within the subdivision. six months later, a social worker offered to purchase an original owner's unit that was for sale. the social worker informed the owner that she planned to operate a halfway house out of the unit, an activity in conformity with the applicable zoning regulations. therefore, the owner did not include the single-family restriction in the deed to the social worker. if a neighbor, who purchased his lot from the developer, seeks to enjoin the operation of the halfway house, will he succeed? a no, because the deed from the owner to the social worker did not refer to the covenant. b no, because the social worker relied on the zoning regulations when purchasing the unit. c yes, because the social worker had notice of the restrictive covenant. d yes, but only if the neighbor can establish a common scheme for development.

The correct answer is C.

Explanation:

The landowner will win because the terms of the deed, not of the contract, control his liability. There is an implied covenant in every land sale contract that at closing the seller will provide the buyer with a title that is "marketable." Marketable title is title reasonably free from doubt, i.e., title that a reasonably prudent buyer would be willing to accept. It need not be a "perfect" title, but the title must be free from questions that might present an unreasonable risk of litigation. Generally, this means an unencumbered fee simple with good record title. Generally, a title acquired by adverse possession is not considered marketable because the purchaser might be later forced to defend in court the facts that gave rise to the adverse possession against the record owner. Here, the marketability requirement did not have to be implied, it was an express term of the contract. Under the doctrine of merger, the contract merges into the deed, and the terms of the contract are meaningless. Even though the contract specified a "good and marketable title," it is the deed that controls, and the deed contained no covenants of title. A deed does not incorporate the title terms of a contract. Thus, (A) is wrong. (B) is wrong; it is not supported by the facts. (D) is wrong because the developer's negligence is irrelevant.

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