The Closing - Deeds

Question 1

Deeds - generally

Answer 1

If the buyer permits the closing to occur, the contractor said to merge with the deed, and in the absence of fraud, the seller is no longer reliable on the promises in the contract, in the deed. The controlling document is now the deed. The deed, transfers, legal title from grantor to grantee.

Question 2

To pass legal title, deed must:

Answer 2

Be lawfully executed and delivered.

Question 3

Lawful execution of a deed - requirements

Answer 3

Executing a valid deed, requires the following:

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

The deed need not recite consideration, nor must consideration pass to make a deed valid.

Question 4

Lawful execution of a deed - description of land

Answer 4

The description of a land in the deep, not be perfect, but it must be an ambiguous and at least provide good lead.

For example, a deed reciting all of my land would be a sufficient description, but a deed reciting some of my land would not be a sufficient description 

Question 5

Lawful execution of a deed - description of land - effect of insufficient description

Answer 5

If the description of the land is insufficient to provide a good lead, title isn’t transferred. The grantor retains title. If a description is ambiguous, rather than vague or an adequate, outside parole evidence is permitted to clear up the ambiguity.

If a deed is delivered with the name of the grantee left blank, the court presumes the person taking delivery has authority to fill in the name of the grantee. If the person fills in the name, the deed is valid. If however, the land description is left blank, the deed is void, unless the grantee was explicitly given authority to fill in the description. 

Question 6

Delivery requirement - generally

Answer 6

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

The delivery requirement could be satisfied when the grantor physically or manually transfers the deed to the grantee. It’s permissible here to use the mail or agent or messenger.

Delivery does not necessarily require actual physical transfer of the instrument itself. The standard for delivery is a legal standard and is a test solely of present intent. Ask: did the grantor have the present intent to part with legal control

Question 7

Delivery requirement - acceptance and rejection

Answer 7

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

Question 8

Delivery requirement - presumptions concerning delivery

Answer 8

Courts recognize a number of rebuttable presumptions with respect to delivery. If the grantor retains possession of the deed, it’s presumed that it hasn’t been delivered. Conversely, if the grantee has possession of the deed, delivery is presumed. Additionally, delivery is presumed if the deed is: handed to the grantee, acknowledged by the grantor in front of a notary, or recorded. 

Question 9

Delivery requirement - extrinsic evidence

Answer 9

All types of evidence, including the grantor conduct or statements before or after the alleged delivery, are admissible to prove the grantor’s intent to pass title. Outside evidence is not permitted to show that an unconditional deed given directly to a grantee was subject to a condition. 

Question 10

Delivery requirement - delivery with oral conditions

Answer 10

If a deed, absolute on its face, is transferred to the grantee with an oral condition, what is the result? The oral condition is no good and delivery is effective.

Question 11

Delivery requirement - delivery with written conditions

Answer 11

Deed containing a written condition is generally valid when delivered. If the condition is the grantor’s death, the deed creates a future executory interest in the grantee.

Question 12

Delivery requirement - delivery to third party

Answer 12

A delivery to a third-party with instructions 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 that third-party is an agent of the grantor or the grantee. For instance, a delivery to the grantor’s Lawyer is probably not delivery, while delivery to the grantee’s lawyer probably is.

Question 13

Delivery requirement - delivery to third party - transfer to 3rd party with conditions

Answer 13

The grantor may deliver an executed deed to a third-party, known as an escrow agent, with instructions that the deed be delivered to the grantee one certain conditions are met. This typically is related to the purchase of property and the condition typically is the payment of the purchase price. Once the conditions are met, title passes to the grantee.

If the escrow agent is given written instructions, the grantor is bound by the delivery to the agent. But, if the grantor gives the escrow agent, oral instructions, the grantor may change the instructions and recall the deed when it’s still in the agent’s hand, unless there is a written contract of sale. 

Question 14

Delivery requirement - delivery to third party - donative escrow with conditions

Answer 14

If the grantor gives a deed to a third-party with instructions to turn it over to the named donee only once certain conditions occur, is there a valid delivery or can the grantor change her mind and demand the deed back before the conditions occur? It depends on the condition. If the condition is something other than the grantor’s death, the grantor may retrieve it. If the condition is the grantor’s death, the grantor cannot get the deed back because they intended to presently convey a future interest.

Question 15

Covenants for title

Answer 15

There are three types of deeds used to convey property interest other than leaseholds: the general warranty deed, the special warranty deed, and the quit claim deed. The difference among these deeds is the scope of title assurance

Question 16

Quitclaim

Answer 16

Quick claim deeds do not contain any covenants for title. The grand tour isn’t even promising that he has title to convey. This is the worst deed, a could hope for. It conveys what the grand has at the time of the conveyance, which could actually be nothing.

Question 17

General warranty deed - generally

Answer 17

The general warranty deed warrants against all defects, entitled, including those attributable to the grand predecessors. The general warranty deed typically contains all six covenants.

Question 18

General warranty deed - present covenants

Answer 18

Present covenants are breached, if ever, at the time the deed is delivered. This means that the statute of limitations for breach of a present covenant begins to run at delivery.

The three present covenants are:

The covenant of seisin: promising that the grantor owns the estate

The covenant of the right to convey: has the power to transfer the property

The covenant against encumbrances: no servitudes or liens on the land 

Question 19

General warranty deed - future covenants

Answer 19

A future covenant is not breached, if ever, until the grantee is disturbed and possession. Thus, the statute of limitations for breach of a future covenant begins around when the grantee is disturbed.

The three future covenants are:

The covenant for enjoyment: the grantor promises that grantee will not be disturbed and possession by a third-party lawful claim of title

The covenant of warranty: promises to defend against reasonable claims of title by a third-party and accompany the grantee for any loss sustained by the claim of superior title

The covenant of further assurances: promises to do whatever is needed to perfect grant title if it turns out to be imperfect.

Question 20

Special warranty deed

Answer 20

This dude contains the same same covenants as the general warranty deed, but here the grantor makes those promises only on behalf of himself, and not those attributable to their predecessor.

Question 21

Statutory special warranty deed

Answer 21

Many states have statutes that provide for what type of deed is conveyed by the use of the word grant in a conveyance without a designation of the type of deed. Often the statutes provide for a deed that creates by implication two limited assurances against acts of the grantor, not her predecessors:

The grantor has not conveyed the estate or any interest into anyone other than the grantee

And

The estate is free from encumbrances made by the grantor

Question 22

Covenants for title - Damages and remote grantees

Answer 22

Present covenants cannot be enforced by remote, grantees, but future covenants run with the grantees estate. If there are successive conveniences by general warranty deed, and the last grantee is affected by lawful claim of title, he may sue anyone up the line. Some states allow him to recover to the extent of consideration received by a defendant covenantor. Other states limit recovery to the lesser of what he paid or what the defendant covenantor received. 

Question 23

Defective Deeds

Answer 23

A void deed will be set aside by the court, even if the property has passed to a bona fide purchaser, but avoidable deed will be set aside only if the property has not passed to a bona fide purchaser.

Void deeds include those that are Ford, were never delivered, were issued to a nonexistent grantee like a grantee, who is dead at the time of delivery, or obtained by fraud in the factum (meaning, the grand tour was deceived, and did not realize that she was executing a deed). Voidable deeds include those executed by minors or incapacitated persons, those obtained through fraud in the inducement, depress, undue, influence, mistake, and breach of fiduciary duty.

If there is a joint owner, attempting to forge the signatures of other joint owners, the forgers signature is valid and will work a severance, but the buyer would hold as a tenant in common with the joint tenants whose signatures were forged. 

Question 24

Defective Deeds - Fraudulent Conveyances

Answer 24

Even when a deed comprise with the required formalities, it may be set aside by the grantor creditors: 1) if it was made with actual intent to hinder, delay, or defraud any creditor of the grantor, or 2) without receiving a reasonably equivalent value and exchange for the transfer, and the debto was insolvent or became insolvent as a result of the transfer.

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

Question 25

Closing Documents - generally

Answer 25

Most real estate closings require more than the exchange of a deed. They are complex events involving the signing of numerous documents and sometimes last minute negotiations.

Question 26

Closing Documents - closing disclosure

Answer 26

Residential mortgage lenders must provide a closing disclosure to mortgagor at least three business days prior to closing. This disclosure must provide details about the mortgage, including principal, interest, and payment amounts, closing cost, potential surprises to mortgagor, and the cash required to close. If the mortgagee fails to provide that disclosure, the mortgagor may be able to cancel the mortgage or recover damages. 

Question 27

Closing Documents - notification of defects

Answer 27

A seller of residential property must provide a form to the buyer at closing, notifying the buyer of any physical defects of which the seller is aware. The seller who failed to disclose a known defect that must be disclosed in this form will be liable for the defect after closing.

Question 28

Closing Documents - environmental report

Answer 28

An owner of your property must generally pay to cure any environmental damage to the property, even if the damage occurred before the owner owned the property.

Question 29

Conveyance by gift and will - generally

Answer 29

In addition to sales, real estate may be conveyed by gift or will. A deed may validly convey real property by inter vivos gift so long as there is: donative intent, delivery, and acceptance.

Question 30

Conveyance by gift and will - ademption

Answer 30

If property is specifically devised or bequeath in the tested as well, but the testator no longer owns it at the time of death. The gift fails. Ademption applies, only two specific requests, which can be satisfied only by the delivery of a particular item, not by money. A gift of land is always a specific device. If the test is specifically and then sells or gives away a part of that property, only that portion is redeemed, the remainder passes to the divisee

Question 31

Conveyance by gift and will - ademption - land under executory contract

Answer 31

By statute, the redemption doctrine does not apply to the proceeds of a contract for sale of land that was executory at the time of the testators death. The devisee gets the proceeds in place of the land. The statutes take precedence over the equitable conversion doctrine. In addition, ademption does not apply when the contract is entered into by the representative oven incompetent testator.

Question 32

Conveyance by gift and will - ademption - other proceeds not subject to ademption

Answer 32

When property is damaged or destroyed before the testators death, but the casualty insurance proceeds are not paid until after the testators death, ademption does not usually apply. The beneficiary of the specific request takes the insurance proceeds. Similarly, ademption usually does not apply to property condemned by the government where the taking was before death, but the ademption award was paid after death

Question 33

Conveyance by gift and will - exoneration

Answer 33

At Common law, and in some states, the devisee of specific property is entitled to have the land exonerated by the payments of liens and mortgages from the testators residuary estate. However, a majority of states have statutorily abolished the exoneration doctrine, requiring the will to expressly provide for payoff.

Question 34

Conveyance by gift and will - lapse and anti lapse

Answer 34

A lapse occurs when the beneficiary of a gift in a world dies before the testator. Under the common law, if a lapse occurs, the gift was void. However, nearly all states now have statutes that prevent lapsed by permitting the gift to pass to the beneficiaries living descendants under certain circumstances. The statues to the scope of the beneficiaries covered by the statute.

Question 35

Conveyance by gift and will - lapse and anti lapse - degree of relationship to testator

Answer 35

Many of the anti-lapse statutes apply only when the named beneficiary is a descendent of the testator. Others apply if the beneficiary is more remotely related, such as a descendent of the testators grandparent. There’s applied to any relative, and still others apply to any beneficiary at all.

Question 36

Conveyance by gift and will - lapse and anti lapse - degree of relationship to testator - descendants are substitutes

Answer 36

The anti-lapse statute does not save the gift for the predeceased beneficiaries estate. Rather it substitutes the beneficiaries descendants for the beneficiary. This property will never pass under the anti-lapse statute to a pre-deceasing beneficiary’s spouse

Question 37

Conveyance by gift and will - lapse and anti lapse - application to class gifts

Answer 37

If a class member within the coverage of an anti-lapse statute predeceases the testator leaving surviving issue, the statute will apply, and the issue will take the deceased class members share of the gift

Question 38

Conveyance by gift and will - lapse and anti lapse - anti-lapse statute does not apply if contrary will provision

Answer 38

The anti-lapse statute does not apply if there is a contrary will provision. For example, the gift is contingent on the beneficiary’s surviving the testator.

Question 39

Conveyance by gift and will - abatement

Answer 39

If the estate assets are not sufficient to pay all claims against the estate and satisfy all devices and bequests, the gifts are a abated. Absent a contrary will provision, estates in most states abate in the following order: property passing by intestacy, the residuary state, general legacies, and specific devices and bequest.

Question 40

Conveyance by gift and will - conflict of laws issues

Answer 40

To the extent that a weld disposes of real property, it’s validity and effect, or determined by the law of the state where the property is located. With respect to dispositions of personal property, the law of the testators domicile at the time of their death controls the validity and effect of the will.