The defendant appeals from the judgment of the trial court awarding the plaintiff damages for breach of the warranty against encumbrances and innocent misrepresentation of real property that the defendant conveyed to the plaintiff by warranty deed.
The defendant claims that the court was incorrect (1) in finding that she had misrepresentеd the property and that the plaintiff had relied on that misrepresentation to his detriment, (2) in finding that she breached the warranty deed covenant against encumbrances, and (3) in awarding damages for diminution of value to the property caused by a wetlands violation as well as damages for costs of correcting that violation. We agree with the dеfendant and reverse the decision of the trial court.
The record and memorandum of decision disclose the following facts. In 1978, the defendant’s brother and predecessor in title, Paul DiLoreto, subdivided a parcel of land located in Old Saybrook for the purpose of constructing residences on each of the two resulting parcels. The property abuts a tidal marshland and is, therefore, subject to the provisions of General Statutes § 22a-28 et seq.
DiLoreto built a bulkhead and filled that portion of the subject parcel immediately adjacent to the wet
During the summer of 1986, the plaintiff decided to perform repairs on the bulkhead and the filled area of the property. The plaintiff engaged an engineering firm which wrote to the state department of environmental protection (DEP) requesting a survey of the tidal wetlands on the property. On March 14, 1986, working with the plaintiffs engineers, the DEP placed stakes on the wetlands boundary and noted that there was a tidal wetlands violation on the property. In a letter to the plaintiff dated April 10,1986, the DEP confirmed its findings and indicated that in order to establish the tidal wetlands boundary, as staked for regulatory purposes, the plaintiff must provide DEP with an A-2 survey of the property. At some point after April, 1986, and before March, 1988, the plaintiff engaged a second group of engineers who met with DEP officials and completed an A-2 survey.
On March 28, 1988, members of the DEP water resources unit met with the plaintiffs new engineers to stake out the wetlands boundary again. On April 13, 1988, as confirmation of that meeting, Denis Cunningham, the assistant director of the DEP water resources unit, wrote to the plaintiff to advise him that the filled and bulkheaded portion of the property, and possibly the northwest corner of the house were encroaching on the tidal wetlands boundary, thereby creating a violation of General Statutes § 22a-30. This letter suggested that to correct the violation, the plaintiff would
The trial court determined that the area had been filled without obtaining the necessary permits required under General Statutes § 22a-32.
This appeal turns on a determination of whether an alleged latent violation of a land use statute or regulation, existing on the land at the time title is conveyed, constitutes an encumbrance such that the conveyance breaches thе grantor’s covenant against encumbrances. An encumbrance is defined as “every right to or interest in the land which may subsist in third persons, to the diminution of the value of the land, but consistent with the passing of the fee by the conveyance.” H. Tiffany, Real Property (1975) § 1002; Aczas v. Stuart Heights, Inc.,
Of the cases cited from other jurisdictions, Fahmie v. Wulster, supra, provides the closest factual analogue to the case before us. In Fahmie, a closely held corporation that originally owned certain property requested permission from the New Jersey bureau of water to place a nine foot diameter culvert on the proрerty to enclose a stream. The bureau required instead that a sixteen and one-half foot diameter culvert should be installed. The corporation went ahead with its plan and installed the nine foot culvert.
The property was later conveyed to Wulster, the titular president of the corporation, who had no knowl
In anticipation of the subsequent resale of the property, Fahmie made application to the New Jersey economic development commission, division of water policy and supply, to make additional improvements to the stream and its banks. It was then that the inadequate nine foot culvert was discovered, and the plaintiff was required to replace it with a sixteen and one-half foot diameter pipe. Fahmie sued Wulster for the cost to correct the violation claiming a breach of the deed warranty against encumbrances.
The Nеw Jersey Supreme Court concluded that it was generally the law throughout the country that a claim for breach of a covenant against encumbrances cannot be predicated on the necessity to repair or alter the property to conform with land use regulations. By so doing, the Fahmie court refused to expand the concept of an encumbrance to include structural conditions existing on the property that constitute violations of statute or governmental regulation. The court concluded that such a conceptual enlargement of the covenant against encumbrances would create uncertainty and confusion in the law of conveyancing and title insurance because neither a title search nor a physical examination of the premises would disclose the violation. The New Jersey court went on to state that “[t]he better way to deal with violations of governmental regulations, their nature and scope being as pervasive as they are, is by contract provisions which can give the purсhaser full protection [in such situations].” Id., 397.
The case before us raises the same issues as those raised in Fahmie. Here, the court found that in 1978 the wetlands area was filled without a permit and in violation of state statute. The alleged violation was
Although the DEP first advised the plaintiff of the alleged violation in 1986, it did not bring any action to compel compliance with the statute. Rather, it suggested that the violation may be corrected by submitting an application to DEP. As of the date of trial, the plaintiff had not made such an aрplication, there had been no further action taken by the DEP to compel compliance, and no administrative order was ever entered from which the plaintiff could appeal. Thus, the plaintiff was never required by DEP to abate the violation or restore the wetlands.
Our Supreme Court has stated that for a deed to be free of all enсumbrances there must be marketable title that can be sold “at a fair price to a reasonable purchaser or mortgaged to a person of reasonable prudence as a security for the loan of money.” Perkins v. August,
Because the plaintiff never аctually filed the application, any damages that he may have suffered were speculative. The court based its assessment of damages on a proposed application and the anticipated costs of complying with that proposed application. The fact that the alleged violation was first noted by DEP only after the plaintiff made requests to rework the bulkhead and filled area, leads us to the conclusion that no litigation or loss was imminent. This position is confirmed by the fact that, as of the date of trial, no order was entered by DEP to compel the plaintiff to rectify the violative condition and no application was made by the plaintiff to gain approval of existing conditions.
We adopt the reasoning of Fahmie v. Wulster, supra, and hold that the concept of encumbrances cannot be expanded to include latent conditions on property that are in violation of statutes or government regulations. To do so would create uncertainty in the law of conveyances, title searches and title insurance. The parties to a conveyance of real property can adequately protect themselves from such conditions by including protective language in the contract and by insisting on appropriate provisions in the deed. As the Illinois Appellate Court held in Monti v. Tangora, supra, 582, “[t]he problem created by the existence of code violations is not one to be resolved by the courts, but is one that can be handled quite easily by the draftsmen of contracts for sale and of deeds. All that is required of the law on this point is that it be certain. Once certainty is achieved, parties and their draftsmen may place rights and obligations where they will. It is the stability in real estate transactions that is of paramount importance here.”
We disagree as well with the court’s finding of innocent misrepresentation. The elements of innocent misrepresentation are (1) a representation of material fact (2) made for the purpose of inducing the purchase, (3) the representation is untrue, and (4) there is justifiable reliance by the plaintiff on the reрresentation by the defendant and (5) damages. Johnson v. Healy,
The judgment is reversed as to the award of damages for breach of the warranty against encumbrances and for innocent misrepresentation of real property, and the case is remanded with direction to render judgment in favor of the defendant on those issues.
In this opinion the other judges concurred.
Notes
General Statutes § 22a-32 provides: “regulated activity permit, application. HEARING, waiver of hearing. No regulated activity shall be conducted upon any wetland without a permit. Any person proposing to conduct or cause to be conducted a regulated activity upon any wetland shall file an application for a permit with the commission, in such form and with such information as the commissioner may prescribe. Such application shall include a detailed description of the proposed work and a map showing the area of wetland directly affected, with the location of the proposed work thereon, together with the names of the ownеrs of record of adjacent land and known claimants of water rights in or adjacent to the wetland of whom the applicant has notice. The commissioner shall cause a copy of such application to be mailed to the chief administrative officer in the town or towns where the proposed work, or any part thereof, is located, and the chairman of the conservation commission and shellfish commission of the town or towns where the proposed work, or any part thereof, is located. No sooner than thirty days and not later than sixty days of the receipt of such application, the commissioner or his duly designated hearing officer shall hold a public hearing on such application, provided, whenever the commissioner determines that the regulated activity for which a permit is sought is not likely to have a significant impact on the wetland, he may waive the requirement for public hearing after publishing notice, in a newspaper having general circulation in each town wherever the proposed work оr any part thereof is located, of his intent to waive said requirement, except that the commissioner shall hold a hearing on such application upon receipt of a petition, signed by at least twenty-five persons, requesting such a hearing. The following shall be notified of the hearing by mail not less than fifteen days prior to the date set for the hearing: All of those persons and agencies who are entitled to receive a copy of such application in accordance with the terms hereof and all owners of record of adjacent land and known claimants to water rights in or adjacent to the wetland of whom the applicant has notice. The commissioner shall сause notice of such hearing to be published at least once not more than thirty days and not fewer than ten days before the date set for the hearing in the newspaper having a general circulation in each town where the proposed work,
The trial court issued certain injunctive relief in connection with the plaintiffs claim of trespass. The defendant has not challenged that portion of the judgment.
The award of injunctive relief for trespass was not challenged on appeal and the judgment on that issue is left undisturbed.