Wilcox v. Pioneer Homes, Inc.

CLARK, Judge. The plaintiffs assign as error the court’s granting of summary judgment in favor of defendant. Plaintiffs contend that a violation of a municipal ordinance regulating the use of real property at the time of sale constitutes an encumbrance on the land and a breach of the warranty against encumbrances. An encumbrance, within the meaning of such a covenant, has been defined as “any burden or charge on the land and includes *142 any right existing in another whereby the use of the land by the owner is restricted.” Gerdes v. Shew, 4 N.C. App. 144, 148, 166 S.E. 2d 519, 522 (1969). The general view is that the existence of a public restriction on the use of real property does not constitute an encumbrance within the meaning of the covenant against encumbrances. Annot., 39 A.L.R. 3d 362 (1971). This view was adopted in North Carolina in Fritts v. Gerukos, 273 N.C. 116, 159 S.E. 2d 536 (1968). In Fritts, the plaintiffs purchased an option on a tract of land containing 49 lots. The defendant agreed to deliver a deed with full covenants and warranty against encumbrances. At the time the parties entered into the option contract, an ordinance of the City of Gastonia prohibited the transfer or sale of land by reference to a subdivision plat without obtaining the city’s approval of the plat. After exercising the option, plaintiffs advertised an auction sale of the 49 lots. The City of Gastonia enjoined the sale for failure of plaintiffs to obtain approval of the plat. Plaintiffs then brought suit for breach of warranty against encumbrances contending that the existence of the ordinance constituted an encumbrance. The North Carolina Supreme Court rejected plaintiffs’ contention on the grounds that: “A restriction upon the use which may be made of land, or upon its transfer, which is imposed by a statute or ordinance enacted pursuant to the police power, such as a zoning ordinance or an ordinance regulating the size of lots, fixing building lines or otherwise regulating the subdivision of an area into lots, is not an encumbrance upon the land within the meaning of a covenant against encumbrances . . . being distinguishable in this respect from restrictions imposed by a covenant in a deed. (Citations omitted.) Thus, the existence of the Subdivision Standard Control Ordinance ... at the time the option agreement was executed did not cause the title of the defendant to be subject to an encumbrance . . . .” (Emphasis added.) Id. at 119, 159 S.E. 2d at 539. In the case sub judice, however, plaintiffs do not contend that the existence of the municipal ordinance constituted an encumbrance on the property, but contend that a violation of the ordinance, existing at the time of the conveyance to plaintiffs, constituted an encumbrance. There are no North Carolina cases which consider whether an existing violation of public restrictions on the use of real property constitutes an encumbrance. There is *143 a split of authority among the jurisdictions which have considered this question. Annot., 39 A.L.R. 3d 362 § 2 (1971). The majority of the jurisdictions have held that, although the existence of a public restriction on the use of real property is not an encumbrance rendering the title to the real property unmarketable, an existing violation of such an ordinance is an encumbrance within the meaning of a warranty against encumbrances. Lohmeyer v. Bower, 170 Kan. 442, 227 P. 2d 102 (1951), (minimum side lot violation); Oatis v. Delcuze, 226 La. 751, 77 So. 2d 28 (1954), (non-conforming building); Moyer v. De Vincentis Construction Co., 107 Pa. Super. 588, 164 A. Ill (1933), (violation of set-back requirement). See Hartman v. Rizzuto, 123 Cal. App. 2d 186, 266 P. 2d 539 (1954), (violation of rear-yard requirement); Miller v. Milwaukee, Odd Fellows Temple, Inc., 206 Wis. 547, 240 N.W. 193 (1932); Genske v. Jensen, 188 Wis. 17, 205 N.W. 548 (1925). Annot., 39 A.L.R. 3d 362 §§ 5-6 (1971). We hold that the existing violation of the minimum side lot requirement as set forth in the ordinance of the City of Hope Mills, constitutes an encumbrance within the meaning of the covenant against encumbrances contained in the plaintiffs’ warranty deed. The summary judgment for defendant was improvidently entered. The judgment is reversed and the cause remanded for proceedings consistent with this opinion. Reversed and remanded. Chief Judge MORRIS and Judge ARNOLD concur.