I.

REAL PROPERTY SUBSTANTIVE: CONVEYANCING, PART 2 (DEEDS)

A. THE CLOSING AND FORMALITIES OF DEED EXECUTION
a. The Deed passes legal title from seller to buyer.
Must Be L-E-D: Lawfully Executed and Delivered.
Need NOT recite consideration
Executing a valid deed requires the following:
1. A writing signed by the grantor
2. An unambiguous description of the land
a. It does NOT need to be perfect. Could be “All of O’s
Land”
b. We can figure out the meaning of “ALL”
3. ID’s the parties by name or description
4. Words of intent to transfer, such as “grant”
b. Insufficient Description
i. If the description of the land is insufficient to provide a good lead, title
isn't transferred.
ii. If a description is ambiguous (not just vague or inadequate), outside
Parol Evidence is permitted to clear up the ambiguity.

c. Defective Deeds
Defective deeds come in 3 varieties:
1. Void Deeds;
a. A void deed will be set aside even if conveyed to a
BFPFV.
2. Voidable Deeds; AND
a. A voidable deed will be set aside only if the
property has not passed to a bona fide purchaser.
3. Fraudulent Conveyances.
a. A fraudulent conveyance is one made to avoid
grantor's creditors.
b. This typically looks like an insolvent grantor
conveying property to a relative for much less than
FMV to avoid it being taken by a creditor. This
conveyance will be set aside unless the grantee took
it in good faith and paid reasonably equivalent
value.
 d. Closing Documents
Transferring title by deed sounds simple enough, but a closing usually
involves a stack of documents to be signed and often includes last-minute
negotiations re: repairs or fixtures.
Besides the deed, the most important documents in that stack for bar exam
purposes are:
i. The closing disclosure:
This document is provided by mortgagee to mortgagor detailing
loan provisions, such as loan amount, interest rate, monthly
payment, penalties, and closing costs.

ii. Notification of defects:

This is a form provided by the seller to the buyer detailing any
physical defects on the property (e.g., leaky roof, termites) known
to the seller.
Required even if the seller is selling the property "as is."

iii. Environmental report:

This report usually comes up in commercial real estate sales.
-An owner of real property is responsible to pay to clean up any
environmental damage on the property, even if it occurred before
they owned the property.
-The parties often negotiate an environmental report explaining
which environmental guarantees the seller is making.

B. DELIVERY OF THE DEED

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.
i. Physical or Manual transfer from grantor to grantee
1. You can USE:
a. Mail OR
b. An Agent
ii. Does NOT actually require the delivery of the deed itself.
iii. Legal Standard: “did grantor have the present intent to be bound,
immediately whether or not it is actually physically transferred”
iv. Rejection: IF recipient expressly rejects the deed. Rejection
prevents delivery.
a. Presumptions Concerning Delivery
Courts recognize a number of rebuttable presumptions with respect to
delivery.
v. If the grantor retains possession of the deed, it is 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:
1. Handed to the grantee,
2. Acknowledged by the grantor in front of a notary, OR
3. Recorded.
b. Extrinsic Evidence
All types of evidence, including grantor's conduct or statements before or
after alleged delivery, are admissible to prove the grantor's intent to pass
title. Outside evidence is not permitted to show the deed given directly to a
grantee was subject to a condition.

c. Delivery with Conditions

vi. Oral Conditions – Oral Condition is NOT Proveable – it drops
out
1. Too Susceptible to Fraud
2.
d. Written Conditions
A deed containing a written condition is generally valid when delivered. If
condition is the grantor's death, the deed creates a future interest (an
executory interest) in grantee.
e. Delivery to Third Party
There are 3 common situations where a deed is delivered to a third party,
and each situation has its own rules.
1. Transfer to Third Party without Conditions
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.
 2. Transfer to Third Party with Conditions (Escrow
Transaction)
This typically is related to the purchase of property and the
condition typically is the payment of the purchase price.
i. If the escrow agent is given written instructions, the grantor is
bound by the delivery to the agent.
ii. But, if the grantor gives the escrow agent oral instructions, the
grantor may change the instructions and recall the deed while it's
still in the agent’s hands, unless there is a written contract of
sale.
3. Donative Escrow with Conditions
i. If the grantor gives a deed to a third party with instructions to turn
it over to the donee only when certain conditions occur, is there a
valid delivery or can the grantor change her mind and demand
the deed back before the conditions occur?
ii. It depends on the condition.
a. If the condition is something other than the grantor's death
(the grantee's marriage, for example), the grantor may
retrieve it.
b. If the condition is the grantor's death, the grantor cannot
get the deed back because they intended to presently
convey a future interest.
f. Watch out for a condition of survival.
Although a condition that the grantee survive the grantor seems like the
same thing as a condition of the grantor's death, it isn't.
i. Unlike the condition of the grantor's death, which conveys a future
interest, a conveyance to the grantee "only if the grantee survives
the grantor" indicates that grantor does not intend to part with
anything until death. Thus, there is no delivery.

g. Merger
Once a deed is delivered and accepted, a buyer can sue only on the
covenants in the deed. The seller is discharged from all obligations under
the contract of sale. This is usually referred to as the contract "merging"
with the deed.

C. COVENANTS FOR TITLE

Types of Deeds
The seller's liability for title defects is governed by the covenants of title
contained in the deed. There are 3 types of deeds classified according to their
promises:
-The quitclaim deed, the general warranty deed, and the special warranty deed.
a. Quitclaim and General Warranty Deeds

Note: Don't be fooled into thinking marketable title is waived if the contract calls
for a quitclaim deed. As we'll see, a quitclaim deed makes no promises with
respect to title. However, the type of deed called for in the K has no effect on the
implied promise to deliver marketable title at closing.

b. Special Warranty Deeds

Special warranty deeds contain the same covenants as general warranty
deeds, but they limit the promises to defects arising while the grantor
owns the property. The grantor promises that they did not do anything to
cause a title defect. Many states have a statutory special warranty deed
that makes only the following two limited assurances against acts of the
grantor (not her predecessors):
(i) that prior to the time of the execution of such conveyance, the grantor
has not conveyed the same estate or any interest therein to any person
other than the grantee; AND
(ii) that the estate conveyed is free from encumbrances made by the
grantor.
c. Deeds and Warranties
Deeds
i. Quitclaim deed: No promises regarding title.
ii. General warranty deed: Warrants against all defects in title
created by both the grantor and all prior titleholders. Contains 6
specific covenants (see below).
iii. Special warranty deed: Warrants against all defects in title
arising during the grantor's ownership.
d. Present Warranties
-Present warranties are breached at the time of conveyance (deed
delivery). The statute of limitations on an action for breach of one of these
warranties begins to run at closing.
-Most statutes of limitation for breach of these warranties are between 4
and 6 years.
i. Seisin: Grantor promises they own the interest in the property they
are purporting to transfer.
ii. Right to the convey: Grantor promises they have the right to
transfer the property.
iii. Against encumbrances: Grantor promises there are no visible
(e.g., easements) OR invisible (e.g., mortgages) encumbrances
against the interest conveyed.
e. Future Warranties
i. Quiet enjoyment: Grantor promises the grantee won't be disturbed
in possession or enjoyment of the property by a third party's lawful
claim of title.
ii. Warranty: Grantor promises to defend grantee against any claims
of title by a 3rd party and compensate grantee for any losses caused
by such claims.
iii. Further Assurances: Grantor promises to perform any acts
necessary to perfect title if it turns out that the title is imperfect.
f. Remedies for Breach of Covenants
Breach of the covenants for title is treated like a breach of K. The remedy
is damages.
-The general guide is that the injured party should be put in the position
they would have been in had the title been as promised.
Limitations: Many states impose limitations, for instance, some limit the
grantor's liability to the purchase price, and others bar recovery altogether
if the deed was a gift.
g. Estoppel by Deed
If a grantor conveys property they don't own and subsequently acquires
title, the title passes by operation of law to the grantee under the earlier
deed. By executing a deed without title, the grantor impliedly covenants
that they will immediately convey title to the grantee. when they acquire
title. The doctrine of estoppel by deed gives the grantee the thing
bargained for, the land itself—and not merely damages.
i. Two Important Limitations
1. Estoppel by deed only applies if the property is conveyed
by warranty deed (general or special).
a. It does not apply if a quitclaim deed is used.
2. The grantee is protected only against the grantor.
a. So, if the grantor subsequently acquires title and conveys
it to a BPFV w/o notice, the original grantee has no rights
against the subsequent BFP.
b. In that case, the grantee can sue the grantor for damages
for breach of the covenants of title.