Feit v. Donahue

In October 1984, David and Linda Donahue (plaintiffs) entered into an agreement to sell their property to Glenn Richard and Penelope Feit (the buyers) (defendants). The agreement required that the Donahues provide good title and also stated that the property was being sold subject to applicable building and zoning regulations. The sale closed, and the buyers resided on the property for three years. However, when the buyers attempted to resell the property, they were notified by the city that the certificate of occupancy for the home had been revoked because the home was not in compliance with the city’s zoning ordinance. The zoning violation occurred when the Donahues failed to complete the construction of a garage during their renovations to provide the number of parking spaces required by the city code. The buyers then requested that the Donahues either complete construction of the garage or rescind the sales agreement. The Donahues refused to take any further action. The buyers were unable to obtain a variance from the city’s zoning board and were therefore unable to list or sell their property. Consequently, the home went into foreclosure. The buyers then filed suit against the Donahues, alleging breaches of the covenants of warranty and quiet enjoyment and the covenants against encumbrances and fraudulent concealment. The trial court dismissed the breach-of-warranty and breach-of-quiet-enjoyment claims but found a breach of the covenant against encumbrances. The court also found against David Donahue, individually, on the fraud claim. The Donahues appealed the trial court’s judgment, arguing that the zoning violation was not an encumbrance within the meaning of the deed. The Donahues further argued that there could be no breach of the covenant against encumbrances because the sales contract stated that the home was subject to the city’s building and zoning regulations. David also asserted that failure to tell the buyers about a zoning requirement was a misrepresentation of law and not fact and, therefore, did not constitute fraudulent concealment.