Property 2—Conveyancing—Deeds

Question 1

Absent a statute to the contrary, what covenants are implied in all deeds?

Answer 1

No covenants are implied in deeds.

Property>Conveyancing>Covenants for Title and Estoppel by Deed>Covenants for Title in a General Warranty Deed>Usual Covenants

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Question 2

When does the covenant of marketable title in a real estate sales contract cease to be assertable?

Answer 2

Once the deed corresponding to the contract has been delivered, absent a showing of fraud or mistake

Property>Conveyancing>Covenants for Title and Estoppel by Deed>Covenants for Title in a General Warranty Deed>Usual Covenants

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Question 3

What are the three present covenants? When may they be breached?

Answer 3

The three present covenants are 
1. Seisen;
2. Right to convey; and
3. Against encumberances. 
They are breached (and thus the statute of limitations on an action starts running), if ever, at the time of conveyance.

Property>Conveyancing>Covenants for Title and Estoppel by Deed>Covenants for Title in a General Warranty Deed>Breach of Covenants

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Question 4

What are the three future covenants? When may they be breached?

Answer 4

The three future covenants are: 
1. Quiet enjoyment; 
2. Warranty; and 
3. Further assurances. 
They are breached (and thus the statute of limitations on an action starts running), if ever, at the time of interference with the grantees use of the land.

Property>Conveyancing>Covenants for Title and Estoppel by Deed>Covenants for Title in a General Warranty Deed>Breach of Covenants

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Question 5

How is the covenant of seisen breached?

Answer 5

The covenant of seisen is breached if the grantor does not own, or have the authority to convey, the interest purportedly conveyed by the deed.

Property>Conveyancing>Covenants for Title and Estoppel by Deed>Covenants for Title in a General Warranty Deed>Breach of Covenants

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Question 6

Do subsequent grantees have a right of action for a breach of the covenant of seisen?

Answer 6

The majority rule is that subsequent grantees do not have a cause of action for the original grantor’s breach of the covenant of seisin.

Property>Conveyancing>Covenants for Title and Estoppel by Deed>Covenants for Title in a General Warranty Deed>Breach of Covenants

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Question 7

What is a land sale contract?

Answer 7

No, the deed need not recite any consideration, nor must any consideration pass in order to make a deed valid. A deed may validly convey real property by inter vivos gift so long as the following requirements are met: (1) donative intent, (ii) delivery, and (iii) acceptance (see C. infra).

Property>Conveyance>Deeds - Form and Content>Formalities

Question 8

What does a land sale contract need to be enforceable?

Answer 8

No, a seal is unnecessary.

Property>Conveyance>Deeds - Form and Content>Formalities

Question 9

What is the doctrine of part performance?

Answer 9

Attestation by witnesses is generally unncecessary, as is an acknowledgement.
NOTE: Either or both might be required for the deed to be recorded.

Property>Conveyance>Deeds - Form and Content>Formalities

Question 10

What is the evidentiary theory supporting the doctrine of part performance?

Answer 10

A deed must be signed by the grantor. The grantor may designate an agent to sign on the grantor’s behalf, but if the signing is not done in the grantor’s presence, the Statute of Frauds generallly requires that the agent’s authority be written.

Property>Conveyance>Deeds - Form and Content>Formalities

Question 11

What is the hardship or estoppel theory supporting the doctrine of part performance?

Answer 11

In the case of deeds by corporations, statutes usually provide for execution by two officers of the corporation and the affixing of the corporation’s seal. If the deed represents a conveyance of all or a substantial part of the corporation’s assets, a resolution of the board of directors approving the transfer may be necessary.

Property>Conveyance>Deeds - Form and Content>Formalities

Question 12

In the majority of states, what is required in order to be qualified as a “part performance”?

Answer 12

The grantee’s signature is not necessary even if the deed contains covenants on her part. Her acceptance of the deed (called a “deed poll” when signed only by the grantor) is sufficient to make the covenants enforceable.

Property>Conveyance>Deeds - Form and Content>Formalities

Question 13

What are the two relevant theories when determining whether a seller can obtain specific performance based on a buyer’s acts?

Answer 13

In a minority of states, when grantor wishes to sell her primary residence, her spouse must sign the deed, even if the spouse is not an owner, because the spouse has “homestead” rights as the spouse of the owner. Homestead rights must be waived by the holder of the rights for good title to be conveyed.

Property>Deeds>Formalities>Signature

Question 14

How is the evidentiary theory used when determining whether a seller can obtain specific performance based on a buyer’s acts?

Answer 14

When real property is helf in trust, the trustee must sign a deed conveying the property. The beneficiary’s signature is not generally required.

Property>Deeds>Formalities>Trustee’s Signature

Question 15

How does the hardship and estoppel theory impact Statute of Frauds application to land sale contracts?

Answer 15

A deed that is defective may be either void or voidable.
Void = implies that the deed will be set aside by the court even if the property has passed to a bona fide purchaser.
Voidable = implies that the deed will be set aside only if the property has not passed to a bona fide purchaser.

Property>Deeds>Defective Deeds & Fraudulent Conveyances>Void and Voidable Deeds

Question 16

What is the doctrine of equitable conversion?

Answer 16

Deeds considered void include those that are forged, were never delivered, were issued to a nonexistent grantee (e.g., a grantee who is in fact dead at the time of delivery, or a corporation that has not yet been legally formed), or were obtained by fraud in the factum (i.e., the grantor was deceived and did not realize that he was executing a deed.

Property>Deeds>Defective Deeds & Fraudulent Conveyances>Void and Voidable Deeds>Void Deeds

Question 17

What is the risk of loss under the doctrine of equitable conversion?

Answer 17

Deeds considered voidable include those executed by persons younger than the age of majority or who otherwise lack capacity (e.g., becuase of insanity), and deeds obtained through fraud in the inducement, duress, undue influence, mistake, and breach of fiduciary duty.

Property>Deeds Form and Content>Defective Deeds and Fradulent Conveyances>Void and voidable Deeds>Voidable Deed

Question 18

Casualty Insurance

Answer 18

Under the Uniform Fradulent Transfer Act (which nearly all states have adopted), a conveyance is fradulent if it was made:

1. with actual intent to hinder, delay, or defraud any creditor of the grantor; or
2. without receiving a reasonably equivalent value in exchange for the transfer, and the debtor was insolvent or became insolvent as a result of the transfer.

Property>Deeds Form and Content> Defective Deeds and Fradulent Conveyances>Fradulent Conveyances

Question 19

Passage of Title on Death

Answer 19

Yes fradulent conveyances can be set aside by the grantor’s creditors.

However, the deed will not be set aside as against any grantee who took in good faith and paid reasonably equivalent value.

Property>Deeds Form and Content> Defective Deeds and Fradulent Conveyances>Setting aside fradulent conveyances

Question 20

Death of Seller

Answer 20

In land contracts and deeds, property may be described in various ways:

• by reference to a government survey
• by metes and bounds
• by courses and angles
• by references to a recorded plat
• by reference to adjacent properties
• by the name of the property
• by a street and number system

Property>Deeds Form and Content>Description of Land Conveyed

Question 21

What happens to a buyer’s interest in property when the buyer dies before the contract of sale is completed?

Answer 21

A description is sufficient if it provides a good lead as to the identity of the property sought to be conveyed.

Property>Deeds Form and Content>Description of Land Conveyed >Sufficient Description Provides a Good Lead

Question 22

In what types of land sale contracts must the seller provide a title that is deemed “marketable?”

Answer 22

If the description is too indefinite, title remains in the grantor, subject to the possibility of a suit for reformation of the deed.

Real Property > Conveyance > Deeds (Form & Content) >Description of Land Conveyed > Insufficient Description - Title Remains in Grantor

Question 23

How can “marketability” of a title be defined?

Answer 23

The general rule is that parol evidence is admissible to explain or supplement a written description or to clear up an ambiguity. Parol evidence may be used to clear up a patent or latent ambiguity.

Real Property > Conveyance > Deeds (Form & Content) >Description of Land Conveyed > Parol Evidence Admissible to Clear up Ambiguity

Question 24

Title may be unmarketable because of a _____ in the chain of title.

Answer 24

Where there is a mistake or inconsistency in the description, the following rules of construction are applied to carry out the parties’ probable intent: (1) Natural monuments prevail over other methods of description i.e. artificial monuments, courses and distances, surfaces, acreage or general descriptions; (2) artificial monuments prevail over all but natural monuments; (3) Courses prevail over distances; (4) all of the foregoing prevail over general descriptions such as name or quantity.

Real Property > Conveyance > Deeds (Form & Content) >Description of Land Conveyed >Rules of Construction

Question 25

Most modern cases hold adverse possession titles to be marketable if: (i) the possession has been for a very lengthy period; (ii) the risk that the record owner will sue appears to be very remote; and (iii) ___________.

Answer 25

Any land descriptions bounded by a street, highway, or other right-of-way, or otherwise conveyed but not described as

Property>Deeds>Form and Content>Title Presumed to Extend to Center of Right-of-Way

Question 26

Even though most states consider all types of____ interests to be transferable, it is often impossible for the owners of the present and future interests, acting together, to transfer a marketable fee simple absolute title.

Answer 26

Rebuttable

Property>Deeds>Form and Content>Land Bounded by Right-of-Way>Evidence to Rebut Presumption

Question 27

Generally, ____, _____, _____, and _____ render title unmarketable unless the buyer waives them.

Answer 27

Notwithstanding the general rule, and unless a contrary intention is expressed, measurements from a right-of-way are presumed to start from the side and not the center

Property>Deeds>Form and Content>Land Bounded by Right-of-Way>Measuring from Monument

Question 28

When can a seller satisfy a mortgage and lein? What does that means for the title?

Answer 28

Any: Slow change in Course Changes Property Rights such as change in course of river or streams; Avulsion Does not Change Property Rights; and Encroachment of water does not change fixed boundary lines

Property>Deeds>Form and Content>Land Bounded by Right-Of-Way Variable Boundary Line Cases

Question 29

What does an easement do to the property and title? Are there any exceptions?

Answer 29

The slow and imperceptible change in course of a river or stream serving as a boundary operates to change the legal boundary. Where land is described as abutting upon a body of water, any slow and imperceptible deposit of soil (“accretion”) belongs to the owner of the abutting land. Where accretion builds up in an irregular pattern over the lands of several adjacent property owners, courts determine title to it in a “just and equitable manner,” either by i) merely extending the property lines out into the water with each landowner getting the property that falls within the lines as extended; or ii) dividing up the newly formed land in proportion to the owners’ interests in the adjoining lands. Likewise, slow erosion of a stream’s bank results in the owner losing title to the affected area.

Property>Conveyancing>Deeds- Form and Content>Description of Land Conveyed>Land Bounded by Right-of-Way>Variable Boundary Line Cases> Slow Change in Course Changes Property Rights

Question 30

Restrictive covenants _______ render title unmarketable.

Answer 30

A sudden, perceptible change of a watercourse (“avulsion”) does NOT change property rights. If a river changes course suddenly, boundaries remain where they were, even if someone who formerly had river access now finds himself landlocked.

Property>Conveyancing>Deeds- Form and Content>Description of Land Conveyed>Land Bounded by Right-of-Way>Variable Boundary Line Cases> Avulsion Does Not Change Property Rights

Question 31

When does an encroachment NOT render title unmarketable?

Answer 31

According to majority view, where property is encroached upon by a body of water (e.g., lake enlarges), previously fixed boundary lines do not change and ownership rights are not affected. Indeed, the boundary lines can still be proven even though the land is completely under water.

Property>Conveyancing>Deeds- Form and Content>Description of Land Conveyed>Land Bounded by Right-of-Way>Variable Boundary Line Cases> Encroachment of Water does not change fixed boundary lines

Question 32

What are zoning restrictions?

Answer 32

Reformation of Deeds is an equitable action in which the court rewrites the deed to make it conform to the intention of the parties. It will be granted if the deed does not express what the parties agreed to, either because of their mutual mistake, or a scrivenor’s error. It will also be granted for unilateral mistake, but only if the party who is not mistaken induced the mistake by misrepresentation or some other equitable conduct. If the property has passes to a bona fide purchase who relied on the original language of the deed, the court will not reform it.

Property>Conveyancing>Deeds- Form and Content>Description of Land Conveyed>Reformation of deeds

Question 33

What is a wavier as it relates to land conveyances?

Answer 33

Real estate closings are complex events involving the signing of numerous documents. The following portion of the outline will cover some of the most critical closing documents

Property>Conveyancing>Deeds- Form and Content>Closing Documents

Question 34

What is the effect of a quitclaim deed?

Answer 34

The mortgagee must clearly provide the following information in the Closing Disclosure:

1) Mortgage amount;
2) Interest rate;
3) Monthly payment;
4) Whether any of those amounts can change during the life of the loan;
5) Whether the mortgage has a prepayment penalty or balloon payment;
6) Estimated monthly taxes, insurance, and assessments;
7) Total closing costs to the buyer; and
8) Cash required for the buyer to complete the closing.

Various federal laws and regulations require residential mortgage lenders to provide specific information to mortgagors at least three business days prior to closing. The required information has been consolidated into a single form called the “Closing Disclosure.”

Failure by the mortgagee to properly provide the Closing Disclosure can result in an opportunity for the mortgagor to cancel the mortgage or to recover damages.

Property>Conveyancing>Deeds—Form and Content>Closing Documents>Closing Disclosure

Question 35

What is the time of marketabilty of a property?

Answer 35

The majority of states now require a seller of residential property to provide a form to the buyer at closing, notifying the buyer of any physical defects of which the seller is aware. In most states, the seller must provide this form even when selling the property “as is.” This form generally includes a list of possible defects (e.g., roof leaks, foundation cracks, termites), each of which the seller must certify do not exist, or disclose information about. A seller who fails to disclose a known defect that must be disclosed in this form will be liable for the defect after closing.

Property>Conveyancing>Deeds—Form and Content>Closing Documents>Notification of Defects

Question 36

When is title furnished in an installment of land contract?

Answer 36

A report negotiated and signed by both parties that identifies which environmental guarantees the seller makes.

An owner of real property must generally pay to cure any environmental damage (e.g., soil contaminated by leaked gasoline) to the property, even if the damage occurred before the owner owned the property. As a result, buyers of commercial real estate often ask sellers to guarantee that the property complies with environmental laws. Sellers want to avoid making these guarantees, and the parties must ultimately negotiate an environmental report, to be signed by both parties at closing, that identifies which environmental guarantees the seller makes.

Property>Conveyancing>Deeds—Form and Content>Closing Documents>Environmental Report