Requirements for a valid deed

1.
2.
3.
4.
5.

Deed must be in writing

Signed by the grantor
Identify the grantor and grantee
Contain words of conveyance
Adequately describe the property

(1-2) First two elements are derived from the statute of fraud and there are some
exceptions such as part performance and estoppel.
3. it must identify the grantor and grantee reasonably
4. Words of conveyance need not be formal or technical.
5. a property description is an essential way of locating boundary lines of a parcel of
land on the surface of the earth.
There are three major methods
1. Metes and bounds
2. Subdivision or plat
3. Government survey
Metes and bounds: starts with a beginning point at an identifiable geographic
location or point of beginning on the boundary of a parcel it then proceeds to
describe each property line until it returns to t he beginning.
Beginning points:
Natural monument
Artificial monument
Courses or directions
Distance
Quantity or area
Place names
Government survey is used to divide parcels into a series of rectangles which are
subdivided into square tracks each containing one square mile.
Plat or subdivision maps:
A plat is a map depicting lots in a new subdivision usually prepared by a hired
surveyor.

Assignment 42: deed must be delivered.

A deed is ineffective until it is delivered. An undelivered deed is void and passes no
title to the grantee even if they are bona-fide purchasers.
In order to deliver a deed the grantor must in writing or by words or actions
manifest the present intent to immediately transfer the entire interest in
land to the grantee.
How can it be accomplished?
1. Physical delivery
2. Words of conveyance along with delivery to an escrow agent.
Common delivery problems:
1. A grantor requests to retain some control over the property itself after
execution of deed.
a. Issue will be whther the grantor intended to make conveyance
immediate as required for valid delivery, if it is a deed disguised as a
will it will be deemed invalid and must follow the rules governing wills.
b. If grantor intends for delivery to only take effect only upon death no
delivery has occurred.
Bona-fide purchaser is one who purchases without notice of anyones claim to the
property.
Presumptions: the court will presume a deed has been delivered if it is recorded or
grantee is in physical possession of the property.
The ability of grantee to have dominion and control helps establish a valid delivery
has occurred.
Delivery to a third party (escrow)
there is widespread judicial agreement that the answer turns on the owners ability
to retrieve the deed. If the grantor can recover the deed this precludes delivery.
Revocable trust is an accepted in some jurisdictions estate planning device.
Irrevocable death escrow is irrevocable.
What makes title unmarketable?
Marketable title is the default standard.
1.) The seller purports to convey more interest in the land than he actually has.
2.) The sellers title is subject to an encumbrance
a. Encumbrance- anything that burdens the land.
3.) There is reasonable doubt as to one or two.
Statutes ordinances and other public restrictions do not make title unmarketable
even if they severely restrict use of the property.

Insurable title: is one that a title insurance company would insure under normal
rates
Record title: is title that appears on the public record, record title does not mean
that the actual title will be valid. It does not protect against title defects not
reflected in the public record. (adverse possession)
Most courts hold that a seller has the right to cure title defects prior to
closing. However if it is clear that the seller cannot cure before closing
buyer can rescind the k.
If the title defect is discovered shortly before closing the seller has a
reasonable time unless the contract states time is of the essence.
A substantial encroachment makes title unmarketable.
Assignment 45:
Buyers Remedies:
If a seller breaches a contract, a buyer may obtain: 1. Damages; and/or 2. Specific
performance (equitable remedy).
Although damages are the usual remedy for breach of contract specific
performance is routinely awarded because land is considered unique and
damages would not likely be an adequate substitute. Damages may also
be awarded in addition to specific performance for example and
abatement on a contract providing the sale of land of 10 acres only
actually conveying 9.
Other forms of damages:
Restitution damages: return of payments made to seller such as deposit of earnest
money.
Expectation damages: benefit of the bargain damages representing lost profit, diff
between market and contract price. Traditionally courts only allowed this when
breaching party acted in bad faith however more courts allow this today regardless
of bad faith.
Expenditures made in reliance of contract (consequential damages, lost profits from
other transactions because of sellers breach in instant K)
SELLERS REMEDIES non-breaching
Expectation damages- diff between k and market price. (duty to mitigate)
Reliance damages- put him where he would have been had he not relied
on the contract.
Liquidated damages- when a buyer refuses to complete a deal seller
retains the deposit as liquidated damages

Specific performance- not only involves payment but transfer of title

Underlying policies:
Covington invokes the prospective approach which results in sustaining liquidated
damages where it is difficult to assess the damages at the time the k was entered
into as long as they are reasonable.
Colonial invokes the retrospective approach that courts should be cautious
regarding liquidated damages because they can be used unfairly.
Historically courts have upheld underliquidated damages provisions more
readily than overliquidated provisions. However, official comment of UCC
provides unreasonably small liquidated damages are unenforceable.
American rule: provides buyer is entitled to sellers profits upon subsequent sale
regardless of good or bad faith.
EXCEPTION TO SPECIFIC PERFORMANCE:
Mutuality of remedy: assures that one party should not have to specifically perform
without being assured other party will be required to satisfy obligations as well.
Mortgages:
A mortgage is a conveyance of interest in real property in order to secure
performance of an obligation. This is almost always evidenced by a note.
3 separate theories:
2/3 follow the lien theory: a mortgage is seen as only a lien on the property and thus
the lender merely holds a security interest in the property not title, thus lender is
entitled to forclosure however not entitled to possession of the property prior to
forclosure.
In a title theory state the mortgagee has the right to take possession without
forclosure because the mortgage is seen as passing title to the property.
A mortgage is a legal nullity unless it secures an obligation. This is evidenced by a
promisorry note.
Promissory note must contain:
1.
2.
3.
4.

Amount
Interest rate
term
Amortization schedule-specifies method barrower will repay the loan.

Foreclosure:
Files a complaint against mortgagor

Judicial forclosure: litigation involving the court in proceeding with a forclosure, the
moment the mortgagor defaults the mortgagee can demand if he has an
acceleration clause full payment.
Mortgagee can used the unpaid balance and does not need cash like everyone else
at a forclosure.
Power of sale forclosure:
Purely private: arises out of contract permitted only by express terms of mortgage.

Exceptions:
Right to redeem- most basic protection is this right for the mortgagor by paying the
balance before foreclosure to redeem the property, this cannot be waived.
Statutory right of redemption: allows mortgagor to buy back property for bid
price for a designated period of time after foreclosure.
Deed of trust: trustor gives deed of trust to thir party the trustee who is usually
connected with the lender in the event of default the lender instructs the trustee to
proceed with foreclosing the deed of trust by sale.
Installment land contract:
The debtor is the purchaser of the land who signs a contract with the vendor,
agreeing to make regular installments payments until the full k price is paid.
Often times there is a accelerated clause provision demanding full payment
on default.
Courts will routinely allow parole evidence when there are contentions that a deed is
actually a mortgage.
General warranty deed- contains all six covenants title. ASSIGNMENT 47
Present covenants are breached at moment deed is delivered
Covenant of Seisin- promise grantor has possession and or right to posess land
Covenant of right to convey- promise grantor has right to transfer title.
Covenant against encumbrances- the title contains no encumbrances, liens
covenants mortgages and leases other than those on the deed. The existing of
zoning restrictions does not constitute a breach of covenant of encumbrances
however a violation of zoning or building restriction may constitute a breach.
Future title covenants are breached after closing ( run with the land) can
be enforced by remote grantees who take the covenantee.
Covenant of future assurances- promise grantor will execute any documents to clear
grantees title (may be enforced by specific performance.

Covenant of warranty- warrant and defend the grantee in title suit.

Covenant of quiet enjoyment- promise grantees possession will not be disturbed by
someone with paramount title.
Under the doctrine of merger the title covenants in the deed supersede any
initial promises for the contract of sale. The contract is merged into the deed and
the only damages one can claim are from breach of covenants. Remedies differ from
breach of contract.
Remedies for breach of title covenants:
Breaches duty to convey marketable title
-

Specific performance and abatement and restitution of earnest money

deposit or damages.
Buyers remedies are limited to damages-

Land sale contract

Sof is indicated in all contracts for the sale of land, therefore either the contract
itself or a memorandum of it must be in writing.
Memorandum will satisfy the sof of it specifies:
-

Names of parties
Land to be conveyed
Purchase price
Signed by the party against whom enforcement is sought.

There are exceptions to sof

Part performance: a party who has taken action in reliance on the contract
may gain limited enforcement of it.
Acts by the purchaser courts are split as to what acts by the purchaser constitute
part performance entitling him to specific performance.
Possession plus payment
Possession plus improvements
Unequivocally referable requirement.
Equitable conversion:
Courts treat the signing of a contract as vesting in the purchaser equitable
ownership of the land. Owner has equitable ownership of the purchase price.
Thus most courts hold risk of loss passess to vendee, however
Vendors risk of loss due to his own negligence or if he could not convey marketable
title remains.

Marketable tite: is title free from reasonable doubt as to whether the seller can
convey the rights he purport to convey. Purchaser is not required to purchase a law
suit.
Defects could be anything in the prior chain of title indicating the vendor does not
have interest he purports
Encumbrances- anything that burdens the land, mortgages, liens, lien for unpaid
taxes, seller has chance to cure before closing.
Deed undelivered.
Zoning ordinances do not render title unmarketable however a violation may.
Adverse possession where there is a judicial determination.
Inadequate description is ok as long as they can be identified with reasonable effort.
Delivery of a deed- it is not effective until delivered, for a deed to be considered
delivered the grantor must intend that the deed become effective immediately by
physical delivery or by words of present intent. Delivery to one co tenant is
considered delivery to all.
Mortgages:
A party who assumes the mortgage agrees to be personally liable for the payments
on the mortgage note, all who assume are forever liable.
A party who takes subject to is not personally liable.
When underlying facts show parties intended a financing device. Courts will apply
mortgage rules.
No foreclosure is binding on mortgagee whose interest is senior to the foreclosing
creditors interest.
Deed to be valid it must
1.
2.
3.
4.
5.

Be in writing
Signed by the grantor
Identify the grantor and grantee-readily identifiable
Contain words of conveyance- no technical words necessary
Adequately describe the property
a. Metes bounds
b. Gov survey
c. Plat or subdivision map

Deed is not effective as a complete transfer unless grantor intends that the deed be
effective immediately. These may be words of present intent or the fact that the
grantor gave up control over the deed.
If it remains in grantors control with ability to change it freely delivery did not occur

If it is in agents hands it may be considered undelivered depending on if the grantor

can recall it.
Escrow agent who obtains deed means grantor no longer has control.
Estoppel by deed means that after acquired property would automatically pass to
the grantee upon grantor acquiring property of land which he did not at the time
hold interest to.
Recording system:
Pure notice: no conveyance is effective against a subsequent purchaser without
notice unless recorded.
Race notice: no conveyance or mortgage of real property shall be good against
subsequent purchasers with notice who first duly record.
Pure race: first to record wins
Period of grace: usually 15 days are allowed to record to preserve priority.
Record notice is when one records the instrument thereby putting subsequent
purchasers on record notice
Inquiry notice are things that would cause a reasonable person to conduct an
investigation which if taken wouldve led to discovery of the existence of prior
unrecorded deed. Possession by someone other than prospective buyers is said to
put individuals on inquiry notice.
Some jurisdictions even say a quitclaim put others on inquiry notice.
Under common law the rule was first in time first in right.