Property II

Special Warranty Deed

Special warranty deeds warrant against unknown defects of title caused by the grantor with six covenants of title, but they can still be subject to to excepted encumbrances.

Six Covenants

Most deeds contain six types of covenants.

Three are breached, if at all, at the time the deed is delivered.
Three are breached, if at all, at some later time.

Present Covenants

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

Seisin

Seisin is the right to immediate possession.

The substance of the covenant of seisin is usually a promise that the grantor actually owns the property rights that the deed purports to convey.

Right to Convey

The covenant of right to convey warrants that the grantor has the legal right to transfer title.

Against Encumbrances

The covenant against encumbrances warrants that there are no encumbrances on the land which would decrease its value.

Encumbrances, as defined for marketable title, generally apply to deed covenants against encumbrances.

Marketable Title

Marketable title is a title not subject to reasonable doubt of defects that would decrease its market value.

There are generally three defects that can make title unmarketable:

  1. Flaw in the seller's title
  2. The existence of an encumbrances on the property not reasonably knowable to the buyer
  3. Events that have deprived the seller of title

Physical defects normally cannot constitute title problems.

The existence of public restrictions do not affect marketability, but courts are split as to whether a violation of these can.

  • However, private restrictions can.

Courts are split on whether adversely possessed title is marketable.

Courts are roughly evenly split between two rules as to what the damages are for defective title.

  • English Rule

    Under the English Rule, the buyer is limited to a return of his money.

  • American Rule

    Under the American Rule, the buyer may recover benefit-of-the-bargain damages—typically the contract price minus the fair market value at the time of the breach.

Future Covenants

Future covenants are breached, if at all, at some later time.

Warranty

The covenant of warranty is a grantor’s promise to defend and indemnify a grantee who suffers an interference with his possession of the land by a person who has superior or paramount title.

The covenant of warranty is practically the same as the covenant of quiet enjoyment.

Quiet Enjoyment

The covenant of quiet enjoyment warrants that the grantee’s possession and enjoyment of the property will not be disturbed by anyone holding superior title.

Practically the same as the covenant of warranty.

Further Assurances

A covenant of further assurances is a promise to take any future actions that may be needed to perfect the title which the original deed purported to convey.

Unlike the other covenants, the covenant of further assurances may also be enforced by specific performance.