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Question 1

What is escrow?

Answer 1

Any situation where a third-party is used to carry out a transfer

Question 2

When does escrow close?

Answer 2

When recording or delivery of the deed happens. Escrow is one way to deliver a deed.

Question 3

How does the relation back doctrine apply to escrow?

Answer 3

When escrow conditions are satisfied and the agent delivers the deed, the delivery relates back to the date that the deed was given to escrow.

Question 4

Is it possible for closing of escrow to happen and delivery of a deed to be valid even if the grantor died or became incapacitated during the course of the escrow?

Answer 4

Yes. Escrow is good for long-term installment contract where death is possible.

Question 5

Is it OK if a grantor puts a deed into escrow but retains the legal power to recall the deed from escrow?

Answer 5

No, if that happens there has not been delivery of the deed

Question 6

What is true escrow?

Answer 6

When a deed is deemed delivered if all conditions have occurred even if manual delivery and recording is delayed

Question 7

What is an escrow agent?

Answer 7

Someone that is paid to receive the deed from the seller, deliver it to the buyer, receive the purchase price from the buyer, and deliver that to the seller, as well as fulfill the conditions of the escrow arrangement

Question 8

What are the duties of an escrow agent?

Answer 8

• He is the agent of both parties until the close of escrow, then he is the grantor’s agent for the purchase money and the grantee’s agent for the deed.
• he must strictly comply with escrow instructions and use reasonable care and skill
  If he breaches, he is liable for damages for the loss caused and punitive damages if he acted recklessly

Question 9

If you put a deed in escrow and you ask that delivery be to someone upon a certain condition, but that person gets the deed before meeting the condition and then transferred it to another person, what happens?

Answer 9

That person never properly got title, so he had nothing to transfer to someone else.

The only exception is if it was the grantor’s fault that that person got the deed early, then he would be estopped from denying the claim. This could happen if he negligently sent the deed to that person instead of to the escrow agent

Question 10

What are the major types of escrow?

Answer 10

– Commercial/sales escrow

– death escrow

Question 11

What is commercial/sales escrow?

Answer 11

Companies that are paid to do this. This includes banks, lawyers, title insurance companies, professional escrow companies etc.

Question 12

Is it necessary that an escrow agent be paid?

Answer 12

No, your friend can agree to do it

Question 13

If you retain the explicit power to recall a deed from escrow, what happens?

Answer 13

That defeats the escrow

Question 14

What is a death escrow?

Answer 14

The grantor puts the deed in someone’s custody with instructions to deliver it to the grantee when the grantor dies. It is necessary that the deed be beyond the grantor’s control and that he can reserve no power over it after it has been deposited.

This is an irrevocable deed. Most jurisdictions treat this as a present transfer of a future interest that reserves a life estate in the grantor

Question 15

What is the legal fiction that is involved in a death escrow?

Answer 15

Essentially the grantor is transferring to himself a life estate and today is transferring a future estate to the other person who will acquire that estate when the grantor dies

Question 16

Does the relation back doctrine apply to death escrows?

Answer 16

Relation back doesn’t apply here because the first delivery is the only delivery since the grantee immediately gets a future interest.

Question 17

What is a Gift Causa Morris?

Answer 17

When the transaction was a gift in contemplation of the grantor’s death. The donor must contemplate imminent death from specific peril and must die of the disorder contemplated. This can be revoked by the donor’s express revocation, and automatically if the donor recovers or the donee dies before the donor.

Question 18

What is estoppel by deed?

Answer 18

This is when the deed is recorded too early. It happens when you transfer title to property that you do not currently own, then you subsequently acquire title, and at that point the title inures to the grantee. The grantee can sue the grantor and compel delivery of the new conveyance

Question 19

What is another name for estoppel by deed?

Answer 19

Doctrine of after acquired title

Question 20

If you convey property to someone else, and that person conveys it to a third-party. If that third-party begins living on the property and then years later finds out that the deed from you to the other person was defective and void because your signature was forged, what happens to the conveyance?

Answer 20

There was failure of the conveyance. In order to fix this you must ensure that the second person acquired the property by fixing the original deed from you to that person. You need to get a new deed and sign it to fix the deed. Then that perfects title to the third person. Essentially you have to fix the original bad deed and the third person has no rights until that original issue is fixed.

Question 21

What are the two different viewpoints on estoppel by deed/doctrine of after acquired title?

Answer 21

– Minority view: title passes by operation of law automatically to the grantee once the granter gets title. This assumes reasonable reliance by the innocent party and ignorance of the true facts. TITLE PASSES AUTOMATICALLY
– Majority view: estoppel theory. The purchaser has to go to court and assert a claim, and the granter is a stopped from denying it to him. TITLE DOES NOT PASS AUTOMATICALLY

Question 22

If someone transfers property that he doesn’t own, then later acquires that property, what happens to the deed under the two different views of estoppel by deed?

Answer 22

• Minority view: title automatically passes to that person once the original guy acquired the property
  – majority view: that person has to go to court and assert his claim to the property and the original person is estopped from denying it to him.

Question 23

What happens (under estoppel by deed) if you transfer property that you do not own to someone else, and then later you acquire that property, then you transfer it to another different person?

Answer 23

• Minority view: title automatically passed to the second person once you acquired the property
  – majority view: the third person will win if he is a BFP, if not, the second person wins

Question 24

Under estoppel by deed, if you do not have title to property and you transfer it to someone else, then you get title to the property and you transfer it to a third person, if the second person was not a BFP, what happens?

Answer 24

There is a split:
– some courts say there is automatic inurement which means that title goes to the original grantee because it passed when the grantor got it, so the grantor had nothing to pass to the third person
– other courts say that estoppel gives priority to a BFP because he is innocent, so the second grantee is not estopped

Question 25

How did the recording act relate to estoppel by deed?

Answer 25

If someone that doesn’t have title to land transfers it to someone else and a third person, the first transfer is recordable, so if it isn’t recorded, then later BFPs that do record get the property. If the first deed is recorded, no later grantee can be a BFP because recordation gave constructive notice

Question 26

If under estoppel by deed, someone doesn’t have title to land and transfers it to someone else, then makes a transfer to a third person, then subsequently gets title, if the first deed gets recorded before actual transfer, does a searcher have a duty to find it?

Answer 26

No, so it doesn’t give constructive notice to later buyers, and later BFPs get priority because the first deed is treated as a recorded or void. This only applies in a grantor/grantee system because tract index systems would show early recording, so notice would have been had