A buyer and seller execute a purchase and sale agreement for a residential lot in a subdivision near Kenai, Alaska. The seller purchased the lot from an Alaska Native village corporation under ANCSA. After executing the purchase agreement, a title search reveals that the lot may be subject to ANCSA restrictions on alienation that were not fully extinguished at the time of the prior transfer. The buyer wants to proceed but the title company declines to issue standard title insurance. Which of the following best describes the buyer's situation under Alaska law?
Correct Answer
D) The buyer may have grounds to terminate the contract if the title defect makes title unmarketable and the contract requires marketable title
Under Alaska contract principles, most purchase and sale agreements require the seller to convey marketable title at closing. If a title search reveals potential ANCSA-related restrictions on alienation that were not fully extinguished — a uniquely Alaska title issue — and a title company declines to issue standard title insurance as a result, the title may be considered unmarketable. A buyer whose contract requires marketable title may have grounds to terminate the contract and recover the earnest money if the seller cannot cure the title defect by the closing date. ANCSA lands present complex title issues not found in other states, and licensees must understand that standard title insurance may have limitations on these parcels.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
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