Plaintiffs bought a single-family residence and learned after closing that the property was subject to a recorded Order of Conditions (OOC) that required a substantial amount of work on an ocean-facing coastal bank. The prior owners had not completed the required work. The plaintiffs sued their lender’s attorney, who had certified that they were receiving good title to the property. The Appeals Court held that the unfulfilled OOC did not constitute a defect in title, saying in relevant part, “[i]t is well established that building or zoning laws are not encumbrances or defects affecting title to property . . .” and “[a]n individual can hold clear title to a parcel of land, although the same parcel is valueless or considered economically unmarketable bnecause of some restriction or regulation on its use.”
Lyon v. Duffy (pdf), Appeals Court decision dated September 29, 2010.