The Closing

Question 1

Merger

Answer 1

When closing occurs, the contract is said to merge with deed and, in the absence of fraud, the seller is no longer liable on the promises in the contract - only those in the deed.

The deed transfers legal title to the buyer

Question 2

Lawful Execution of a Deed (LEAD)

Answer 2

Executing a valid deed requires:

1) a writing signed by the grantor
2) an unambiguous description of the land
3) identification of the parties by name or description
4) words of intent to transfer (grant)

NOTE - the deed need not recite consideration, nor must consideration pass to make a deed valid

Question 3

Description of the Land (deed)

Answer 3

The description of the land in the deed need not be perfect, but it must be unambiguous and provide a good lead (all of O’s land is sufficient)

If the description is insufficient to provide a good lead, title isn’t transferred. The grantor retains the title.

If a description is ambiguous rather than vague or inadequate, parole evidence is permitted to clear the ambiguity

Question 4

Delivery Requirement (Deed)

Answer 4

A deed isn’t effective to transfer an interest unless is has been delivered. Delivery turns on the grantor’s intent that title pass immediately, even is possession is postponed. Acceptance is presumed.

Test - Did the grantor have the present intent to part with legal control

Question 5

Acceptance and Rejection (Deed)

Answer 5

Rejection will defeat delivery.

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

Question 6

Delivery and Extrinsic Evidence

Answer 6

All types of evidence, before or after the alleged delivery, are admissible to prove the grantor’s intent to pass title.

Parole evidence is not permitted to show that an unconditional deed given directly to the grantee was subject to a condition

Question 7

Delivery with Oral Conditions

Answer 7

If a deed, absolute on its face, is transferred to the grantee with an oral condition, the oral condition drops out and delivery is accomplished

Question 8

Delivery to Third Party

Answer 8

A delivery to a third party with instructions to deliver the deed to the intended grantee is considered valid delivery.

Question 9

Delivery to Third Party With Conditions

Answer 9

If the conditions are written, the grantor is bound by the delivery to the agent

IF the grantor gives the escrow agent oral conditions, the grantor may change the instructions and recall the deed while its still in the agent’s hand, unless there is a written contract of sale.

Question 10

Types of Deeds

Answer 10

General Warranty Deed
Special Warranty Deed
Quitclaim Deed

Statutory special warranty deed

Question 11

Quitclaim Deed

Answer 11

A quitclaim deed is one that contains no covenants of title. The grantor is not covenanting that they even have title to convey.

A quitclaim deed only conveys what the grantor has at the time of conveyance.

Question 12

General Warranty Deed

Answer 12

A general warranty deed warrants against all defects in title, including those attributable to the grantor’s predecessors.

The general warranty deed contains all six covenants.

Question 13

Present Covenants

Answer 13

Present covenants are breached, if ever, at the time the deed is delivered.

1) Covenant of Seisin - The grantor owns the estate

2) Covenant of Right to Convey - Grantor has the power to convey title (no temporary restraints, sound mind)

3) Covenant Against Encumbrances - no servitudes or other liens

Question 14

Future Covenants

Answer 14

A future covenant is not breached, if ever, until the grantee is disturbed in possession.

1) Covenant of Quiet Enjoyment - Grantor promises that the grantee will not be disturbed in possession by a third party’s lawful claim of title

2) 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

3) Covenant of Further Assurances - Grantor promises to do whatever is needed to perfect the grantee’s title if it later turns out to be imperfect

Question 15

Special Warranty Deed

Answer 15

A special warranty deed contains all the covenants as a general warrant deed, but only as to the grantor. The grantor makes no representations on behalf of his predecessors in interest.

Question 16

Statutory Special Warranty Deed

Answer 16

Many states have statutes that provide for what covenants are included when title is conveyed by the use of the word “grant” without a designation of the type of deed.

These contain two implied covenants as to the grantor (not predecessors)

1) the grantor has not conveyed the same estate or any interest therein to anyone other than the grantee; and

2) the estate is free from encumbrances made by the grantor

Question 17

Defective Deeds

Answer 17

Void deeds will be set aside even if the property was passed to a BFP. Deeds are void if they are forged, were never delivered, issued to a nonexistent grantee, or obtained by fraud in execution.

Voidable deeds will be set aside only if the property has not passed to a BFP. Voidable deeds include those executed by minors or incompetents, those obtained by fraud in inducement, duress, undue influence, mistake, and breach of fiduciary duty.