BAR FLASHCARDS - P12 Closing - Deeds

Question 1

Deeds

Answer 1

At closing, the deed becomes the operative document. It conveys LEGAL title from the grantor to the grantee.

Remember: to pass legal title from grantor to grantee the deed must be “LEAD”: Lawfully Executed And Delivered.

Question 2

THE CLOSING—DEEDS

Answer 2

If the buyer permits the closing to occur, the contract is said to merge with the deed (it disappears) and, in the absence of fraud, the seller is no longer liable on the promises in the contract, only those in the deed. The controlling document now is the deed. The deed transfers legal title from grantor to grantee.

Question 3

“LEAD”:

Answer 3

Lawfully Executed And Delivered.

Question 4

LAWFUL EXECUTION OF A DEED

Answer 4

Lawful execution (executing a valid deed) requires:
- Writing signed by grantor
- Unambigous descriptrion of the land
- identification of parties by name or description
- Words of intent to transfer, such as “grant”
NO CONSIDERATION Needed, nor must consideration pass to make deed valid.

Question 5

Description of Land

Answer 5

Unambigous description: The description of land in the deed need not be perfect, but it must be unambiguous and at least provide good “lead.”

“All” is fine.
“Some” is NOT. With research, can we discern the meaning?

Question 6

Effect of Insufficient Description

Answer 6

If the description of the land is insufficient to provide a good lead, title isn’t transferred. The grantor retains title. If a description is ambiguous, rather than vague or inadequate, outside (parol) evidence is permitted to clear up the ambiguity.

Question 7

If a deed is delivered with the name of the grantee left blank…

If the land description is left blank…

Answer 7

If a deed is delivered with the name of the grantee left blank, the court presumes the person taking delivery has authority to fill in the name of the grantee.
If the person fills in a name, the deed is valid.
If, however, the land description is left blank, the deed is void unless the grantee was explicitly given authority to fill in the description.

Question 8

THE DELIVERY REQUIREMENT

Answer 8

Legal standard testing grantor’s present intent (did they have present intent to be bound?).

A deed isn’t effective to transfer an interest in realty unless it has been delivered.
Delivery turns on the grantor’s intent that title pass immediately, even if possession is postponed. Acceptance is presumed.
• The delivery requirement could be satisfied when the grantor physically or manually transfers the deed to the grantee. It’s permissible here to use the mail or agent or messenger.
Delivery does not necessarily require actual physical transfer of the instrument itself.
The standard for delivery is a LEGAL standard and is a test solely of present intent.
Ask: Did grantor have the PRESENT INTENT to part with legal control? Present intent to be immedaily bound = delivery accoplished, regardless of physical delivery.

Question 9

Acceptance and Rejection

Answer 9

Rejection defeats delivery. Acceptance is presumed, but if a grantee expressly rejects the deed, the deed is ineffective to pass title.

Question 10

Presumptions Concerning Delivery

Answer 10

Courts recognize a number of rebuttable presumptions with respect to delivery. If the grantor retains possession of the deed, it’s presumed that it hasn’t been delivered. Conversely, if the grantee has possession of the deed, delivery is presumed. Additionally, delivery is presumed if the deed is:
• Handed to the grantee,
• Acknowledged by the grantor in front of a notary, or
• Recorded

Question 11

Extrinsic Evidence

Answer 11

All types of evidence, including the grantor’s conduct or statements before or after the alleged delivery, are admissible to prove the grantor’s intent to pass title.
Outside evidence is not permitted to show that an unconditional deed given directly to a grantee was subject to a condition.

Question 12

Delivery with Oral Conditions

Answer 12

If a deed, absolute on its face, is transferred to the grantee with an oral condition, what result? the ORAL CONDITION drops out. its not provable and delivery is DONE.

Question 13

Delivery with Written Conditions

Answer 13

A deed containing a written condition is generally valid when delivered.
If the condition is the grantor’s death, the deed creates a future interest (an executory interest) in the grantee.

Question 14

Delivery to Third Party

Answer 14

A delivery to a third party with instructions to deliver the deed to the intended grantee is considered valid delivery.
Whether a delivery to a third party without instructions is a valid delivery often hinges on whether that third party is an agent of the grantor or the grantee.
For instance, a delivery to the grantor’s lawyer is probably not delivery, while delivery to the grantee’s lawyer probably is.

Question 15

Transfer to Third Party with Conditions (Escrow Transaction)

Answer 15

Grantor may deliver an executed deed to a third party, known as an escrow agent, with instructions that the deed be delivered to the grantee once certain conditions are met.

This typically is related to the purchase of property and the condition typically is the payment of the purchase price.

What happens once the conditions are met? TITLE passes to grantee.

If the escrow agent is given written instructions, the grantor is bound by the delivery to the agent. But, if the grantor gives the escrow agent oral instructions, the grantor may change the instruc- tions and recall the deed while it’s still in the agent’s hands, unless there is a written contract of sale.

Question 16

Donative Escrow with Conditions

Answer 16

If the grantor gives a deed to a third party with instructions to turn it over to the named donee only when certain conditions occur, is there a valid delivery or can the grantor change her mind and demand the deed back before the conditions occur? It depends on the condition. If the condition is something other than the grantor’s death (the grantee’s marriage, for example), the grantor may retrieve it. If the condition is the grantor’s death, the grantor cannot get the deed back because they intended to presently convey a future interest.

Question 17

condition of survival

Answer 17

Although a condition that the grantee survive the grantor seems like the same thing as a condition of the grantor’s death, it isn’t. Unlike
the condition of the grantor’s death, which conveys a future interest, a conveyance to the grantee “only if the grantee survives the grant- or” indicates that the grantor does not intend to part with anything until death. Thus, there is no delivery.

Question 18

3 types of deeds

Answer 18

1. Quitclaim - no covenants for title
2. General warranty
3. Special warranty

Question 19

COVENANTS FOR TITLE

Answer 19

There are three types of deeds used to convey property interests other than leaseholds: the general warranty deed, the special warranty deed, and the quitclaim deed. The difference among these deeds is the scope of title assurance (that is, covenants for title).

Question 20

Do not confuse covenants for title with real covenants (written promises to do or not do something on the land). They are completely different. Real covenants
do not relate to title.

Answer 20

Do not confuse covenants for title with real covenants (written promises to do or not do something on the land). They are completely different. Real covenants
do not relate to title.

Question 21

1. Quitclaim

Answer 21

• no covenants for title

Which covenants does a quitclaim deed contain? NOTHING.
Grantor isn’t even promising that he has title to convey. This is the worst deed a buyer could hope for. It conveys only what the grantor has at the time of the conveyance.

Question 22

2. General warranty

Answer 22

The best deed a buyer could hope for. Why?
It warrants against all defects in title, including those attributable to grantor’s predecessors.
The general warranty deed typically contains all six of the following covenants. The first three are present covenants, meaning that the covenant is breached, if ever, at the time the deed is delivered.

Question 23

General warranty - 6 covenants for title

Answer 23

Present Covenants
When does the statute of limitations for breach of a present covenant begin to run? at DELIVERY
The three present covenants:
• The covenant of seisin: Grantor owns
• The covenant of the right to convey: Grantor has power to transfer (sound mind, etc), and is under no temporary restraints.
• The covenant against encumbrances: No servitudes/liens on the land
Future covenants. A future covenant is not breached, if ever, until the grantee is disturbed in possession.
When does the statute of limitations for breach of a future covenant begin to run? When grantee IS DISTURBED
The three future covenants:
• The covenant for quiet enjoyment: Grantor promises that grantee will not be disturbed in possession by a third party’s lawful claim of title.
• The covenant of warranty: Grantor promises to defend against reasonable claims of title by a third party and to compensate the grantee for any loss sustained by the claim of superior title.
• The covenant for further assurances: Grantor promises to do whatever is needed to perfect grantee’s title if it later turns out to be imperfect.

Question 24

Present Covenants

Answer 24

Present Covenants
When does the statute of limitations for breach of a present covenant begin to run? at DELIVERY
The three present covenants:
• The covenant of seisin: Grantor owns
• The covenant of the right to convey: Grantor has power to transfer (sound mind, etc), and is under no temporary restraints.
• The covenant against encumbrances: No servitudes/liens on the land

Question 25

Future Covenants

Answer 25

Future covenants. A future covenant is not breached, if ever, until the grantee is disturbed in possession.
When does the statute of limitations for breach of a future covenant begin to run? When grantee IS DISTURBED
The three future covenants:
• The covenant for quiet enjoyment: Grantor promises that grantee will not be disturbed in possession by a third party’s lawful claim of title.
• The covenant of warranty: Grantor promises to defend against reasonable claims of title by a third party and to compensate the grantee for any loss sustained by the claim of superior title.
• The covenant for further assurances: Grantor promises to do whatever is needed to perfect grantee’s title if it later turns out to be imperfect.

Question 26

3. Special warranty

Answer 26

Warrants against all defects in title (only for grantor themselves).

This deed contains the same covenants as the general warranty deed, but here the grantor makes those promises only on behalf of himself. (Note: Grantor makes no representations on behalf of his predecessors in interest.)

Question 27

Statutory Special Warranty Deed

Answer 27

Many states have statutes that provide for what type of deed is conveyed by the use of the word “grant” in a conveyance without a designation of the type of deed. Often these statutes provide for a deed that creates by implication two limited assurances against acts of the grantor (not her predecessors): (1) that the grantor has not conveyed the same estate or any interest therein to anyone other than the grantee and (2) that the estate is free from encumbrances made by the grantor.