The plaintiff Qiang Xu (Xu) commenced this action against Franklin and Fei Shuan Cheung (the Cheungs), seeking damages for breach of contract, misrepresentation and emotional distress.

Xu desired to purchase from the Cheungs a two-family dwelling located in Flushing, New York. Prior to July 1, 1998, a title search revealed various illegal occupancy violations.

On July 1, 1998, Xu entered into a contract to purchase the property. Pursuant to paragraph 10 of the contract, the Cheungs agreed to convey the premises free of all violations of law, municipal ordinances, orders or requirements issued as of the date of the agreement, and to convey [*2]the premises free of such violations at closing.

Pursuant to a deed dated November 12, 1998, the Cheungs conveyed the premises to Xu. In that deed, the Cheungs convenanted that they "had not done or suffered anything whereby the said premises have been encumbered in any way whatever...."

On January 30, 2000, an inspector from the Housing Department checked the premises and left a vacate order which states "Failure to Comply With Vacate Order Q 54-97, August 25, 1997." On February 12, 2000, the Housing Department conducted another inspection, and indicated that the premises was still illegally occupied and such persons should be vacated. Thereafter, Xu discovered the vacate order dated August 25, 1997, which directs all persons occupying the Single Room Occupancy (SRO) units in the premises to vacate, and indicates that such occupancies were illegal, the cellar through second floor lacked any secondary means of egress, and the cellar SRO unit had insufficient light and ventilation.

On March 13, 2000, Xu entered into a deed transfer agreement with Gary K Chuang (Chuang), whereby Xu gave Chuang a 99% interest in the deed in exchange for, inter alia, Chuang's assistance in paying Xu's mortgage, assuming a new mortgage, and paying the costs of curing all violations.

During his examination before trial conducted on January 16, 2004, Xu stated, inter alia, that at the time he purchased the property from the Cheungs, it was a vacant, two-family home. In 1999, he began renting the second floor to about four adults and, about one year later, the Building Inspector cited him for violations. Upon his purchase of the premises, he did not erect any wall in the basement. Some existing violations related to the basement being partitioned into different rooms, and required the restoration of the basement to its prior condition. At the time he transferred an interest in the property to Chuang, a vacate order existed directing him to cease operating SRO units.

Xu moves for summary judgment and an award of damages in the amount of $139,410.07.

The Cheungs oppose the motion, asserting that: (1) because the title report prepared prior to the contract date showed building violations for alterations, in August, 1998, they began curing those violations; (2) on November 16, 1998, four days prior to the closing, the Building Department reinspected the premises and dismissed all violations other than Violation 12P, which was marked "pending"; (3) they completed the work necessary to remove Violation 12P and, on December 18, 1998, the Building Inspector dismissed that violation; (4) on January 8, 1999, they paid all fines levied by the Environmental Control Board issued in connection with the prior violations; (5) a record search conducted on February 19, 1999 confirmed there were no outstanding violations against the premises; (6) all of Xu's claims are based upon violations issued in January, 2000, some 15 months after the closing; (7) at the time of closing, all parties were satisfied that there were no liens or encumbrances on the property; and, (8) all complained-of violations were created by Xu after the closing. [*3]

Xu replies, inter alia, that because a vacate order issued to the Cheungs on August 25, 1997 remained valid at the time of the sale, the title to the premises was not marketable.

A marketable title is good title, one that is free and clear from encumbrances and encroachments or from material defects (see Lovell v Jimal Holding Corp., 127 AD2d 747 [1987]; DeJong v Mandelbaum, 122 AD2d 772 [1986]; see also Grace v Napa, 46 NY2d 560 [1979], recons. denied, 47 NY2d 952 [1979]; Brokaw v Duffy, 165 NY 391, 399 [1901] [both cases stating that title is not marketable when it exposes a party to litigation]). The test of whether a title is marketable is whether the purchaser can peacefully enjoy and use the property for his intended and announced purposes (see DeJong v Mandelbaum, supra).

Here, Xu failed to demonstrate that the title conveyed by the Cheungs was not marketable. Xu took title from the Cheungs aware that outstanding violations existed with respect to illegal occupancies and related alterations of the property. The Cheungs delivered the property vacant to Xu, cleared all violations of record as of November 17, 1996, and satisfied the liens resulting therefrom as of January 8, 1999.

The violations Xu received in 2000 related to his own illegal renting of SRO units on the second floor. Xu cannot complain that the property cannot be used for that intended purpose where such use was never permitted under the relevant laws and regulations of the municipality. In any event, Xu has failed to demonstrate that the August 25, 1997 vacate order required anything more than the eviction of the illegal occupants living at the premises at that time, and the alterations already performed by the Cheungs.

Accordingly, the motion is denied.

Dated: October 13, 2004_____________________

J.S.C.