The Closing - Deeds Flashcards
(41 cards)
1
Q
Closing - Impact on Contract vs. Deed
A
- if buyer allows closing to occur, K merges w/ deed -> deed becomes the controlling legal doc
- in absence of fraud, seller no longer liable on the K promises
- deed transfers legal title from grantor to grantee
2
Q
Acronym for Remembering How to Pass Legal Title
A
- to pass title from grantor to grantee, deed must be LEAD:
Lawfully
Executed
And
Delivered
3
Q
Lawful Execution of a Deed - Required Elements
A
Executing a valid deed requires:
- a writing signed by the grantor
- an unambiguous description of the land
- identification of the parties by name or description
- words of intent to transfer, such as “grant”
- need not recite consideration, nor must consideration pass to make a deed valid
4
Q
Lawful Execution of Deed - Description of Land
A
- description of land need not be perfect
- BUT must be unambiguous + at least provide good “lead”
- note that in contrast to grantee identification, if land description left blank, deed is void unless grantee was explicitly given authority to fill in the description
5
Q
Effect of Insufficient Land Description
A
- if description of land is insufficient to provide a good lead, title isn’t transferred -> grantor retains title
- if description is ambiguous, rather than vague or inadequate, outside (parol) evidence is permitted to clear up ambiguity
6
Q
Lawful Execution of Deed - Identification of Parties
A
- if deed is delivered with the name of the grantee left blank, the court presumes the person taking delivery has authority to fill in name of grantee
-> if that person fills in name, the deed is valid
-> BUT if they leave it blank, the deed is invalid
7
Q
Delivery Requirement
A
- deed isn’t effect to transfer an interest unless it’s been delivered
-> turns on grantor’s intent that title pass immediately, even if possession is postponed - can be satisfied when grantor physically or manually transfers the deed to grantee (permissible to use mail or agent or messenger)
- delivery doesn’t necessarily require actual physical transfer of the instrument itself (test is solely of present intent)
8
Q
Delivery - Acceptance and Rejection
A
- acceptance is presumed
- BUT rejection defeats delivery -> if grantee expressly rejects the deed, it’s ineffective to pass title
9
Q
Presumptions Concerning Delivery
A
- if grantor retains possession of deed, courts presume it hasn’t been delivered
- if grantee has possession of deed, delivery is presumed
- delivery also presumed if deed is handed to grantee, acknowledged by grantor in front of notary, OR recorded
- note that these presumptions are rebuttable
10
Q
Delivery - Extrinsic Evidence
A
- all types of ev, including grantor’s conduct or statements before or after alleged delivery, are admissible to prove intent to pass title
- BUT outside ev not permitted to show that an unconditional deed given directly to a grantee was subject to a condition
11
Q
Delivery with Written Conditions
A
- deed containing a written condition is generally valid when delivered
- if condition = grantor’s death, deed creates future interest (executory interest) in grantee
12
Q
Delivery to Third Party
A
- delivery to third party with instruction 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 the third party is an agent of the grantor or grantee
-> delivery to grantor’s lawyer likely not delivery, vs delivery to grantee’s lawyer likely is
13
Q
Transfer to Third Party With Conditions
A
- aka escrow transaction
- grantor may deliver an executed deed to a third party, known as an escrow agent, w/ instructions that the deed be delivered to grantee once certain conditions are met
-> typically related to purchase of property, + the condition typically is the payment of the purchase price
14
Q
Escrow Transaction - Oral vs. Written Instructions
A
- if escrow agent given written instructions, grantor is bound by delivery to the agent
- BUT if grantor gives oral instructions, grantor may change instructions + recall the deed while it’s still in the agent’s hands
-> UNLESS there’s a written K of sale
15
Q
Donative Escrow with Conditions - Rule Re Grantor Death
A
- deals w/ when grantor gives deed to third party w/ instructions to convey to named donee when certain conditions occur
- if condition is NOT grantor’s death, the grantor may retrieve the deed
- if the condition IS grantor’s death, grantor can’t get deed back because they intended to presently convey a future interest
-> EXCEPTION - condition of survival - if grantor says “only if grantee survives grantor” or similar, it’s NOT delivery (no conveyance of future interest, taken as sign grantor doesn’t intend to part with anything until death)
16
Q
Covenants for Title - Types of Deeds
A
Three kinds:
- general warranty deed
- special warranty deed
- quitclaim deed
17
Q
Quitclaim Deed
A
- grantor not promising that he has title to convey
- worst deed a buyer could hope for
- conveys only what the grantor has at the time of conveyance
18
Q
General Warranty Deed - Overall Concept
A
- warrants against all defects in title, including those attributable to grantor’s predecessors
- typically contains six covenants (3 present, 3 future)
19
Q
General Warranty Deed - Covenants Included in the Deed
A
Present (breached, if ever, at T of delivery)
- covenant of seisin (deals w/ possession - saying grantor actually owns the property the deed purports to convey)
- the covenant of the right to convey
- the covenant against encumbrances
Future (breached, if ever, once grantee disturbed in possession):
- covenant for quiet enjoyment
- covenant of warranty
- covenant for further assurances
20
Q
Encumbrances - Real Estate Contract vs. Deed
A
- for k’s, purchaser is generally presumed to have contracted to accept the land subject to visible easements
- vs. for deeds, most jurisdictions hold that the covenant against encumbrances is breached even if grantee knew of the encumbrance (whether or not it’s visible)
21
Q
Covenant for Quiet Enjoyment
A
- grantor promises grantee won’t be disturbed in possession by a third party’s lawful claim of title
22
Q
Covenant of Warranty
A
- grantor promises to defend against reasonable claims of title by a third party + to compensate grantee for any loss sustained by claim of superior title
23
Q
Covenant for Further Assurances
A
- grantor promises to do whatever is needed to perfect grantee’s title if it later turns out to be imperfect
24
Q
Special Warranty Deed
A
- contains same covenants as general warranty deed, but grantor makes those promises only on behalf of self
-> i.e. grantor makes no promises on behalf of predecessors in interest
25
Statutory Special Warranty Deed
- essentially a statutory default, when the deed is ambiguous
- many states have statutes that say what kind of deed is conveyed if you use the word "grant" in a conveyance but don't designate the kind of deed
- usually provides for deed that creates by implication two limited assurances against acts of grantor (NOT predecessors):
1) that grantor hasn't conveyed same estate or any interest therein to anyone other than grantee
2) that estate is free from encumbrances made by grantor
26
Damages and Remote Grantees
- present covenants can't be enforced by remote grantees, but future covenants run w/ grantee's estate
-> if there are successive conveyances by general warranty deed + last grantee is evicted by lawful claim of title, he may sue anyone up the line
-> some states allow to recover extent of consideration received by defendant-covenantor
-> others limit recovery to lesser of what he paid or wha defendant-covenantor received
27
Void Deeds - Examples
- forged deeds
- no delivery
- dead or nonexistent grantee
- deed obtained by fraud in factum (grantor didn't know what they were signing)
28
Voidable Deeds - Examples
- executed by minor
- executed by one w/o mental capacity
- deed obtained by fraud in inducement
- deed obtained by duress or made under undue influence
- deed obtained by mistake
- deed through breach of fiduciary duty
29
Void vs. Voidable Deeds
- void deed set aside by court even if the property passed to a bona fide purchaser
- vs. voidable deed set aside only if the property has NOT passed to a bona fide purchaser
30
Joint Owners - Forging Signatures of Others
- if one joint owner tries to convey property by forging the signatures of the others, that conveyance would valid as to the owner whose signature is valid but void as to the others
-> severance
-> buyer would hold as tenant in common with joint tenant whose signature was forged
31
Fraudulent Conveyance
Even when deed complies with formalities, may be set aside by grantor's creditors if made:
1) w/ actual intent to hinder, delay, or defraud any creditor of grantor OR
2) w/o receiving a reasonably equivalent value in exchange for the transfer, + debtor was insolvent or became insolvent as result of transfer
- BUT deed won't be set aside against any grantee who took in good faith + paid reasonably equivalent value
32
Closing Documents
- basically, most closings require more than exchange of deed
Other docs include:
- closing disclosure
- notification of defects
- Environmental report
33
Closing Disclosure
- residential mortgage lenders have to provide closing disclosure to mortgagor at least 3 business days prior to closing
-> if mortgagee fails to provide, mortgagor may be able to cancel mortgage or recovery damages
Provides details about mortgage, including:
1) principal, interest, + payment amounts
2) closing costs
3) potential surprises to mortgagors AND
4) cash required to close
34
Closing Docs - Notification of Defects
- seller of residential property has to provide form to buyer at closing -> notifies buyer of any physical defects the seller is aware of
- seller who fails to disclose known defect that must be disclosed will be liable for the defect after closing
35
Environmental Report
- owner of real property must generally pay to cure any enviro damage, even if occurred prior to ownership of property
- as result, buyers often ask sellers to guarantee the property complies w/ enviro laws (want to make sure they don't have to pay later)
- BUT sellers often want to avoid guarantees
- SO parties negotiate environmental report -> identifies which guarantees the seller makes + signed by both parties at closing
36
Conveyance by Gift
- deed may validly convey real property by inter vivos gift so long as there is:
1) donative intent
2) delivery AND
3) acceptance
37
Ademption
- relates to wills
- applies only to specific bequests (satisfied only by delivery of a particular item, not $) -> therefore, applies to real estate gifts
- if property specifically devised or bequeathed in testator's will, but no longer owned by testator at t of d, gif fails
- if testator has only sold/given away part of the property, remainder passes to devisee
38
Ademption - Land Under Executory K
- by statute, ademption doesn't apply to proceeds of a K for sale of land that was executory at t of testator's death
-> devisee gets proceeds, not the land
- also doesn't apply when K entered into by rep of an incompetent testator
39
Other Proceeds Not Subject to Ademption
- prop damaged/destroyed before death but insurance proceeds not paid until after -> beneficiary gets insurance proceeds
- usually doesn't apply where property condemned by gov before death but condemnation award not paid until after
40
Exoneration
- at common law + in some states, devisee of specific property is entitled to have the land exonerated by payment of liens + mortgages from testator's residuary estate
- BUT majority of states have abolished this doctrine -> require will to expressly provide for payoff
41
Conflict of Laws Issues
- to extent that will disposes of real property, its validity + effect are determined by law of the state where he property is located
- wrt dispositions of personal property, law of testator's domicile at t of death controls validity + effect of will
