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Question 1

What is involved in the future covenant of quiet enjoyment?

Answer 1

A promise that the grantee will not be evicted either actually or constructively by someone with paramount title. This means that no one with superior title/interest in the property will interfere with the grantee’s rights and possession.

This is breached only when the grantee is actually or constructively evicted from the land through something that interferes with his right to possession

Question 2

What is involved in the covenant of warranty under future covenants?

Answer 2

This is a promise to defend the grantee against any unlawful claim made against his title and to compensate him for successful claims made against title.

The grantor is liable for the cost of litigation in defending title PLUS reasonable attorney fees AND damages for any loss caused by the defects or encumbrances.

This covenant is breached when defence is needed and not provided. The grantee must be evicted either actually or constructively or there must be some process to enforce a claim that has been started PLUS the grantor must refuse to provide defence

Question 3

If a title defect exists, does that automatically mean breach of the covenant of warranty?

Answer 3

No, the stipulation is that there must be a title defect AND the grantor must refuse to provide defence. As long as the grantor provides a defense, this covenant is not breached

Question 4

Is it necessary for the breach of the covenant of warranty that the grantee have already been evicted?

Answer 4

No, it also includes when legal process has begun to evict the grantee

Question 5

How does the covenant of warranty apply to contractors?

Answer 5

A contractor that does unworkmanlike construction knows that the house might be sold and that the new buyer should be entitled to rely on the skill of the builder and that the construction be reasonably fit for its intended use. This is why subsequent purchasers can recover for LATENT defects that manifest themselves after the later purchase and would not have been discoverable through reasonable inspection before purchase. The purchaser must show that the defect was caused by the contractor’s workmanship

Question 6

What is involved in the future covenant of “further assurances“?

Answer 6

A promise to execute any extra documents and take any steps necessary in the future to perfect and protect title. This could mean giving extra documents to cure defects in the deed.

This is the only covenant that can be enforced by specific performance where the grantee can force the grantor to deliver needed documents. If this has been breached the grantee can also get damages if the grantor refuses to comply and the grantee suffers harm because of it.

Question 7

If something is listed in the deed as an exception, how does that affect the covenants of title?

Answer 7

It cannot be a basis for claiming breach of the covenant. Exceptions limit the scope of the covenant.

Question 8

If you are selling land that is subject to a mortgage and the buyer agrees to assume the mortgage, and the deed has a covenant against encumbrances, is that a breach of the covenant?

Answer 8

No, because the parties agreed that the deed had an exception for the mortgage that was expressly created by the language of the deed

Question 9

How do damages work if a grantee built valuable buildings on property and then there was a breach of a covenant of title?

Answer 9

The grantee can only get what he paid for the land, although if he acted in good faith there are often statutes that protect him

Question 10

What are the damages that a grantee can get if there has been a breach of a covenant of title?

Answer 10

The grantee can only get what he paid for the land (as a max remedy)

Question 11

If there has been a breach of a covenant of title that is an encumbrance, what can the grantee get as recovery?

Answer 11

He can recover the diminution of the value of the land if it doesn’t exceed the total price as measured on the date of the sale

Question 12

If a grantee got land as a gift, and didn’t pay a dollar amount and one of the covenants of title was breached, what is the recovery for the grantee?

Answer 12

Some jurisdictions allow recovery to be fixed at the upper limit of the land’s value at the time of the conveyance

Question 13

Must a deed be recorded in order to be valid?

Answer 13

No and there is no direct penalty for not recording

Question 14

What is the point of recording a deed?

Answer 14

It establishes priority for successive grantees. If you do not record, you risk the grantor making later conveyances that destroy the validity of yours.

Question 15

How do recording systems work?

Answer 15

Each state is responsible for the records of land in its borders, and each has a publicly maintained recording system with the onus being on private users.

Question 16

Is it possible for a recorded document to look valid but to have a fatal defect?

Answer 16

Yes, title could be affected by events outside of the recording system.

Question 17

What is involved in a full search of the recording documents for a piece of property?

Answer 17

Tracing title back to the sovereign

Question 18

By recording your deed, who are you giving notice to?

Answer 18

Later transferees

Question 19

If you choose not to record a deed, your unrecorded instrument is void against whom?

Answer 19

Later BFPs

Question 20

What is the process of recordation of a deed?

Answer 20

Once the deed is delivered, someone such as the grantee/lawyer/title company/escrow agent gives the instrument to the recorder’s office who notes the date and time, collects a fee, makes copies, returns the original, and puts the copy in the deed book in the order it was received

Question 21

What is a BFP?

Answer 21

Bona fide purchaser. This is someone who pays value, in good faith, and takes without notice of a prior claim or conveyance. That means they had no actual, inquiry, or constructive notice.

Question 22

What is the benefit of being a BFP?

Answer 22

The recording acts protect later conveyances if the person is a BFP and the deed was not recorded

Question 23

What is required for a BFP to be considered to have paid value?

Answer 23

He cannot have gotten the property for free, been given it as an inheritance, etc. He must’ve bargained and paid for the property. But it does not mean that he had to have paid the full market value

Question 24

What is a flaw with the recording system?

Answer 24

While it is a depository for copies of documents, there is no guarantee that all of the documents are there, or that there aren’t problems with the documents that are there, or that the documents are in their proper places

Question 25

If a deed is not legally effective, but it was recorded, does that change anything?

Answer 25

No, it is void (this can happen if it was forged, fraudulent, written by a minor, never delivered, etc.)

Question 26

What does title insurance do?

Answer 26

You pay a company to search and issue a policy that promises to indemnify you if title is defective. This does not mean that the deed is valid, it just assures damages if title is not good

Question 27

If two people claim ownership to land, how do you figure it out?

Answer 27

First in time is first in right, but a subsequent person can take title away by:
– AP
– land sale contract
– conveyancing and recording acts

Question 28

If two people claim ownership to the same piece of land, what are the different approaches to that?

Answer 28

– Common law rules

– recording acts

Question 29

What are the common law rules if two people claim ownership to the same land?

Answer 29

Priority is by the chronological order of delivery. First in time is first in right, whether it is recorded or not because you cannot convey what you do not own. If the owner delivers to Anna on Monday, then to Bart on Tuesday, Anna wins.

This is based on the concept of the derivative title principle which says if you already transferred your interest to someone, you have no remaining interest to convey to another

Question 30

What is the exception to the common law rule of “first in time is first in right“?

Answer 30

If the first interest is only equitable and the second interest is legal, the second person prevails if he is a BFP. So if the owner had a contract with Anna for the land, but before it was performed, he sold it to a BFP, that person now owns the land

Question 31

How do the recording acts deal with two people claiming ownership to the same land?

Answer 31

This changes the common law rules if the first person does not record and the second person‘s behaviour qualifies him for protection under the act. By complying with the recording act, that gives notice of the prior claimant’s rights and preserves his ability to assert first in time to support a superior title claim by giving all others constructive notice.

Question 32

Is it compulsory that you record your deeds?

Answer 32

No

Question 33

Do the recording acts affect the common law rules regarding validity of instruments?

Answer 33

No because recording has nothing to do with whether the deed was forged or fraudulent or there was a delivery problem or the person was incapacitated etc.

Question 34

Must the first person to get a conveyance of land record it?

Answer 34

No, because the recording statutes only protect subsequent purchasers. If you were the first, then you are fine, but later buyers can strip away title if they meet the recording statute requirements

Question 35

If a grantee only promises to pay value for land, is he considered to be a subsequent purchaser that is a BFP?

Answer 35

No, so he cannot use the recording acts to make a prior unrecorded conveyance invalid by arguing he had no notice of it.

Question 36

What are the requirements to be a BFP?

Answer 36

Must pay value, take in good faith, have no notice of a prior conveyance

Question 37

If you get property as a gift, are you considered to be a BFP?

Answer 37

No, because you did not pay value for it

Question 38

If a document is recorded, but the document has a technical issue like the person that notarized it had a suspended license, does that still give notice?

Answer 38

There is a split:
– majority view: if the document wasn’t proper, then the deed shouldn’t have been recorded and it doesn’t give constructive notice
– minority view: it doesn’t matter if there was a technical problem, it is still recorded, so if a search was done it would’ve been seen

Question 39

What is the rationale behind the recording acts?

Answer 39

It is based on an estoppel theory to protect subsequent purchaser’s reasonable reliance. If a later buyer knows or should know of a previous claim, his reliance isn’t reasonable, so he doesn’t deserve protection