Midterm Exam Memo Case #3

Midterm Exam Memo Case #3

Frank Skwierc

Bryant & Stratton College

BUSS213―Business Law & Ethics

Instructor―Jennifer DeRosa

April, 01, 2017

MEMORANDUM

Gold & Gold Law Firm

Helen, New York

To:Bill Tate, Managing Partner

From:Frank Skwierc, Paralegal

Date:April, 01, 2017

Subject:Research on Deed Transfer from King to Prince

Dear Mr. Tate, as you requested I performed research for your client Mr. Prince, concerning the ten feet of property that he wants to purchase from Mr. King. Mr. Tate, you are very much aware thatbuying a property is one of the major investment purchases that many people will do in their lifetime.These aspects are generally fundamental but those ignorant of the process may dismiss them to their own detriment. Representation, documentation, execution, perfection and transfer of titles in general can be cumbersome if not handled properly. There are legal pitfalls to watch out for and avoid. Mr. Prince is very wise to involve a legal practitioner in this process, it is not practical for individuals to manage the process themselves. From the start of this process there is many documents that need to be examined to confirm the authenticity of title, as well as, insuring that there is no *encumbrance for the buyer (Doherty, 2017)(Chlebowski, 2017).

The type of deed transfer that Mr. King wants, the “quitclaim deed” is the worst type of deed because it conveys no warranty whatsoever that the seller’s title is a good title, or that there are no encumbrances on the property. By accepting a quitclaim deed, the transferor is saying “here is whatever interest I have in the property.Obviously, a buyer should be extremely careful before agreeing to accept a quitclaim deed. If the seller’s title turns out to be faulty, the buyer will have no remedy against the seller ("The Closing and Real Property Deeds", 2017). In contrast the type of deed transfer Mr. Prince is asking for, a “general warranty deed” makes five specific guarantees. These guarantees are sometimes known as *covenants and are an integral part of a warranty deed, these parts are:

1)Seisin: The first covenant is the covenant of seisin, in which the grantor guarantees that he or she owns the land that is being conveyed to the grantee. (Note: The term “seisin” is an ancient term that means the taking of legal possession of land.)

2)Right to Convey: The second covenant is the covenant of right to convey. The grantor covenants (promises) that he or she has the power and authority to sell or give over the property to the grantee.

3)Lack of Encumbrances: The third covenant is the covenant against encumbrances. The grantor promises that there are no easements, mortgages, liens, or any other encumbrances on the property.

4)Quiet Enjoyment/ Covenant of Warranty: The grantor also promises that he or she will defend against a third party’s claims of superior title. In other words, if the grantee is sued by someone who claims to have had title to the land that was superior to the grantor’s title, then the grantor will help the grantee defend against the lawsuit. In addition, the grantor promises that he or she will compensate the grantee if the third party successfully takes title to the land (or any portion of the title to the land) against the grantee.

5)Further Assurances: The grantor promises to do whatever is necessary to perfect the conveyed title if it turns out that the grantor’s title was imperfect. If, for example, it turns out that there was a mortgage on the property at the time it was transferred, the grantor promises that he or she will pay off the mortgage so as toperfect the title of the grantee ("The Closing and Real Property Deeds", 2017).

While I highly do not recommend that Mr. Prince give in to taking the offer of a quit claim deed out of necessity for obtaining the property he desires from Mr. King. There may be an alternative deed that the two of them can agree on that will protect Mr. Prince from any future liabilities, but can be worded so that Mr. King cannot be responsible for any unknown defects with the property. This type of deed is known as a “*Special Warranty Deed”,("Special Warranty Deed", 2017), the special warranty deed is what is used by the seller when the seller is confident that he or she owns the property, and is being honest about the conveyance, but is not so confident about the previous owners of the property. In this type of deed, the seller makes the same warranties as in the general warranty deed, but only makes those guarantees with respect to defects in title that arose during the time that the grantor had possession of the property. The grantor makes no warranty as to defects that arose before the property came into the possession of the grantor. For example:

1)Brian conveys Tanner acre to Lynn. Three years later, Alf brings an action against Lynn. Alf claims that while the property was in the possession of Willy, Alf bought the property from Willy and that he has a contract to prove it. Alf claims that Willy breached that contract and later gave the property to Brian. Alf succeeds in his lawsuit and is able to evict Lynn and take the property. The question of whether Brian is liable to Lynn for Lynn’s loss depends on what type of deed Brian used to convey the property to Lynn. If Brian used a quitclaim deed, of course, he has no liability to Lynn. If he used a general warranty deed, then Brian would be liable to Lynn for the damage she suffered as a result of Alf’s repossession because the covenants of seisin, right to convey and quiet enjoyment were all violated by Alf’s action against Lynn. However, if Brian used only a special warranty deed to convey Tanner acre to Lynn, Brian would escape any liability. This is because the defect (in this case, Willy’s conveyance of Tanner acre to Alf) arose before Brian came into ownership of Tanner acre. Therefore, Brian’s warranty to Lynn does not cover this defect.

2)Brian conveys Tanner acre to Lynn. Three years later, Alf brings an action against Lynn. Alf claims that while the property was in the possession of Brian, Brian sold Tanner acre to Alf. Alf claims that Brian breached the contract and conveyed Tanner acre to Lynn instead. In this case, even a special warranty deed would subject Brian to liability to Lynn for any damage she suffers as a result of Alf’s suit. The defect arose while Brian owned Tanner acre, and so even a special warranty deed would cover that defect. The only type of deed that would not cover this defect would be a quitclaim deed ("The Closing and Real Property Deeds", 2017).

There is one fact Mr. Tate, that should be made clear to both Mr. King, and Mr. Prince, and that is if the deed does not specifically mention what type of deed it is, it is presumed to be a general warranty deed, so if the seller violates any of the warranties that are conveyed with the deed, the rules that govern the deed will be those that are normally outlined in a general warranty deed, leaving the buyer with an unlimited choices on how to rectify any problems. A couple of options the buyer can do is rescind the contract and get back what they paid for the *real estate, or they can keep the property and sue the seller for damages caused by the breach of the *covenant. This will be of great interest to Mr. King when trying to sell him on the idea of a Special Warranty Deed should the reason he wants a quit claim deed is generally because he is not sure of what covenants were applied during conveyance to Mr. King when he procured the property.For example:

Jack *conveys the Hill to Jill, but neither specify the type of deed, the deed will automaticallybe listed as a general warranty deed. If it turns out, that the Wicked Witch, who for some reason, saunters over from her Gingerbread House and tells Jill she holds a $100,000 mortgage on the Hill she got from Jack. Jill can either rescind the contract she had with Jack and get her money back that she paid for the Hill. Or, she can pay the Wicked Witch off for the $100,000 and the sue Jack for the $100,000. Even if Jack claims at a later date that it was only a quit claim deed, he will have no defense because no such notation was made on the deed when it was filed ("The Closing and Real Property Deeds", 2017)(Chlebowski, 2017).

While we know that a quit claim deed can only benefit Mr. King in the conveyance of this piece of property, and that a general warranty deed is in the best interest of our client Mr. Prince.Also, the fact that I pointed out how a special warranty deed would provide Mr. King and Mr. Prince, the opportunity to write in any special conditions that involve how the two of them would resolve certain covenants that worry Mr. Prince, like #2 the right to convey, #3 lack of encumbrances, and #4 quiet enjoyment. Should Mr. King still insist on a quit claim deed, we can try and approach this matter a different way, by changing the name on the type of deed that would be filed. Mr. King might feel that the word “warranty” absolves Mr. Prince of any responsibilities concerning the property even if those problems were created through no fault of Mr. King ("The Closing and Real Property Deeds", 2017).

Because Mr. King, may only be concerned with the way the wording of the title that appears on the deed, Mr. Prince can offer to call the deed a “*Vesting Deed.”When it comes to different types of deeds, and the rights transferred through them, a Vesting Deed is one of the best to get. It's generally a part of the Warranty Deed. The "vesting term" refers to the fact that the seller has absolute right of title, as well as, ownership rights. These rights can then be transferred to the buyer ("What Is a Vesting Deed? Definition and How It Works", 2017). This type of deed will serve in the best interest of our client Mr. Prince, and may appeal to Mr. King, by omitting the word warranty from the title of the deed.

However, Mr. Prince should not try to fill out a vesting deed on his own, because a vesting deed itself does not necessarily transfer all of the covenant rights of a warranty deed to the buyer of the property unless it is properly worded. However, the vesting deed, serves as a guarantee from the seller, Mr. King, to the buyer, Mr. Prince, that Mr. King, does have those rights, and he's willing to transfer them to Mr. Prince. If it turns out that Mr. King is wrong, and Mr. Prince, purchasesthe property that had a $50,000 lien on it, then the seller, Mr. King, must reimburse Mr. Prince for breach of contract. In addition to making payment for the lien, most states also require that the seller pay the legal fees you incur. To ensure, that the covenants that Mr. Prince, is most concerned about, and that vesting will take effect, Mr. Prince has to ensure that the language used in the deed is precise ("What Is a Vesting Deed? Definition and How It Works", 2017).

Each state has its own precise language that must be included for the vesting to take effect. Most of the time, it involves some variation on the phrase "absolute right of title and ownership rights," the individual filing the vesting deed, must make sure that they know what the state requires. Failure to use these precise terms can sometimes keep the vesting deed from being enforceable. You can generally find out the particular terms by talking to a real estate agent or even the clerk's office. For further protection, Mr. Prince will want to make sure that he files the proper paperwork with the courthouse where the property is located. This way, it will put all other individuals on notice that Mr. Prince, now has the full rights to the property. In most states, this filing is an essential part of the process known as “*perfection” ("Definition of PERFECTION", 2017).Failure to perfect can result in a partial or total loss of vesting rights, among otherprecise covenants ("What Is a Vesting Deed? Definition and How It Works", 2017).

In the event that Mr. Prince decides not to retain our services in this matter, and only wishes that we act in an advisory capacity, which I highly recommend against, because of the complex nature in the wording of these documents, there are a few things that we can advise him to do, that he can perform on his own. The first and foremost thing Mr. Prince will want to do, is to complete a title search on the parcel of property owned by Mr. King. Here are some ways Mr. Prince can do this for free:

1)Visit the Courthouse of the County or District in Which the Land Is Situated

Chains of title and deed information are available for your perusal if you visit the courthouse. You must go to the courthouse where the land is located. In some cases, you may have to go through the different papers by hand, noting the specific transfers of the title and any requirements that went along with it. This form of title search is time consuming, but it is free.

2)Visit the County Assessor

Most states now have additional tools available for free property title searches. You can find these on your state government sites under "county assessor." You will have to select your county, and you can then search through the listed properties. Bear in mind that in many counties, this information is incomplete. If you don't find your property through the title search, you will need to visit the courthouse in person. Remember that you should always be able to find your property. If the property does not show up in the search, that means that the information is either mislabeled or it is not in the current system. It doesn't mean that there are no restrictions on it or other similar issues ("How to Do a Property Title Search for Free", 2017).

However, if Mr. Prince finds doing this type of free title search distasteful, he can go on the Internet and locate several companies that are willing to provide the information to him for a fee. Mr. Prince should be very careful when choosing one of these title search providers, most do not provide a refund if the title search proves to have inaccuracies or is missing some information. One company that I found that does provide a refund if their information they provide is found to be in error is, U. S. TITLE RECORDS, PROPERTY & TITLE INFORMATION, ("| United States PROPERTY RECORDS | Lien Search | Title Search | Deeds", 2017). Within this site, he will find all twelve packages he will need to ensure that he has all the information required for preparing any deed that Mr. King and Mr. Prince decide on, this search can also determine if the information he finds is adequate enough to satisfy his concerns about giving up the covenants he wants that are not part of a quit claim deed. The cost of all twelve packages is, $974.50 ("| United States PROPERTY RECORDS | Lien Search | Title Search | Deeds", 2017).

Once Mr. Prince obtains all the documentation from U. S. Title Records, and decides which type of deed that he a Mr. King can agree on, they can use the information from these records to fill out the conveyance ofthe property by obtaining the proper deed forms from USLegal Forms. Com. The cost of the Forms will depend on the type of deed conveyance, they choose, this company will also assist them in filling out the forms for an additional cost(U.S. Legal Forms, 2017). Mr. Tate, you must stress to Mr. Prince, that doing it this way still means that he will have to ensure “perfection” in the document otherwise failure to perfect can result in a partial or total loss of vesting rights, among others ("What Is a Vesting Deed? Definition and How It Works", 2017).

In conclusion Mr. Tate, my personal recommendations, is for Mr. Prince to accept our firm for representation on this matter, or to seek representation from a real-estate professional. While there are many sites that he can find on the Internet that can help Mr. Prince write out a proper conveyance of the deed, none of them will represent him in court if a defect is found in the transfer of the property. Besides that, it may result in a costlier court battle in the future, by trying to save a few dollars now by doing this on his own. Attached is a copy of the research I conducted on this case that I have mentioned here, along with a list of real-estate terms that Mr. Prince should make himself familiar with. Thank you for giving me this opportunity to be of assistance to you, and I look forward to serving you again in any future assignments.

Enclosures: Research/Terms

See Term for Words proceeded by an *.

Research

The Closing and Real Property Deeds. (2017). Nationalparalegal.edu. Retrieved 31 March 2017,

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