Reed v. Hassell

On August 16, 1969, Thomas and Sally Reed (plaintiffs) agreed to purchase two lots from Andrew and Loretta Hassell (defendants). In the sale contract, the Hassells specifically stated they were not guaranteeing that the property was free from easements observable by inspection of the property. Accordingly, the sale contract put the risk of any observable easements on the buyers, the Reeds. On February 4, 1970, the sale was completed using a special warranty deed guaranteeing clear title to the Reeds. After the sale, the Reeds cleared the property of heavy growth and discovered an encroachment of an existing road. The road took up 25 percent of one lot and made that lot difficult to develop under local zoning laws. The Hassells had not been aware of the road-encroachment issue. The Reeds sued the Hassells for damages, claiming that the encroachment was a breach of the terms of the warranty deed. The Hassells argued that the sale contract had specifically put the risk of observable easements on the Reeds, and this easement was observable. The Reeds countered that the easement was only observable after cutting brush and hiring a surveyor. The Reeds also countered that the sale contract’s exception for easements was void because the sale contract had merged into the warranty deed. The Reeds argued that accordingly, the warranty deed’s guarantee of free title controlled.