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Prof. Ortiz
Warranty Problems
1. O owns Blackacre. By general warranty deed, A conveys Blackacre* to B for $20,000. B conveys to
C for $15,000. O, the true owner, ousts C. The jurisdiction holds that present covenants are
breached, if at all, when made and the chose in action (i.e., cause of action) is not assigned. Assume
that any cause of action against A falls within the statute of limitations for suit.
GWD QD O ousts C. chose in action (i.e., cause of action) is not assigned {relates to remote grantor}
A B C
$20K $15K
* For purposes of these problems, it does not matter why A sold Blackacre when it was owned by O. It is possible that A was
committing fraud, in which case A would be liable for fraud as well as for whatever warranties A might be liable under. It might also
be an honest mistake (e.g., a Howard v. Kunto type of error where A thought he owned the property, but it turns out that A did not
actually own the property).
** According to Brown v. Lober, in order to constitute a breach of quiet enjoyment, there must be a disturbance in possession either by
actual eviction or constructive eviction. In each of these problems, O actually evicts C (or D in problem 3 on page 5).
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b. Deed from B to C is a general warranty deed.
GWD GWD O ousts C. chose in action (i.e., cause of action) is not assigned {relates to remote grantor}
A B C Relisten [41:00] word form exam A,B,C. something new.
$20K $15K
(1) Can C sue B for breach of any covenants {present and/or future}?
Yes, B gave C a general warranty deed. Rule: GWDs contain all six warranties.
It does not matter whether the covenants are future or present because B is not a remote grantor
to C. Therefore:
Covenant of seisin - yes, because B did not have title to pass to C.
Covenant of right to convey - yes, because B did not have the right to convey to C.
General warranty {lawful claim} - yes, because B must defend C against Os lawful claim.
Quiet enjoyment {disturbed in possession} - yes, because C was disturbed in possession by O (evicted by O).
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2. O owns Blackacre. By general warranty deed, A conveys Blackacre to B for $20,000. B conveys to
C for $15,000. O, the true owner, ousts C. The jurisdiction holds that present covenants are
breached, if at all, when made and the chose in action (i.e., cause of action) is assigned. Assume that
any causes of action against A are still within the statute of limitations for suit.
(3) Can C sue A for breach of any present covenants? {repeat} class note: 1 coa for present covenants.
Yes. Bs causes of action for present covenants are assigned to C. Therefore, C can sue for
whatever present covenants were breached when A passed the deed to B.
Therefore:
Breach of seisin - yes, because A did not have seisin when A conveyed to B.
Breach of right to convey - yes, because A did not have the right to convey to B.
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b. Deed from B to C is a general warranty deed. chose in action (i.e., cause of action) is assigned.
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3. O owns Blackacre. By general warranty deed, A conveys Blackacre to B for $15,000. By quitclaim deed,
B conveys to C for $12,000. By general warranty deed, C conveys to D for $20,000. O ousts D when the
land is worth $24,000. Assume that any cause of action against A is still within the statute of limitations
for suit.
(a) D can choose to sue C for $20,000 (the amount C received) for:
Breach of seisin (because C did not have title when C conveyed to D);
Breach of right to convey (because C did not have the right to convey when C conveyed to D);
Breach of general warranty (because C must defend D against Os lawful claim); and
Breach of quiet enjoyment (because Ds possession was disturbed by O).
(b) D can choose to sue A for $15,000 (the amount A received from sale to B) on future covenants
only (because causes of action for present covenants is not assigned to D). Thus:
Breach of general warranty (because A must defend D against Os lawful claim); and
Breach of quiet enjoyment (because Ds possession was disturbed by O).
(c) D cannot sue B on any covenants whatsoever because B conveyed a quitclaim deed to C.
Insert Can C sue A for present covenants? No. Chose in action not assigned. Cause of action against A held by B.
(a) D can choose to sue C for $20,000 (the amount C received) for:
Breach of seisin (because C did not have title when C conveyed to D);
Breach of right to convey (because C did not have the right to convey when C conveyed to D);
Breach of general warranty (because C must defend D against Os lawful claim); and
Breach of quiet enjoyment (because Ds possession was disturbed by O).
(b) D can choose to sue A for $15,000 (the amount A received from sale to B) on present and future
covenants because Bs causes of action for As breaches of present covenants have been assigned
to D. (The causes of action passed to C when B sold the property to C. The causes of action
then passed to D when C sold the property to D.)
Thus:
Breach of seisin (because A did not have title when A conveyed to B);
Breach of right to convey (because A did not have the right to convey when A conveyed to B);
Breach of general warranty (because A must defend D against Os lawful claim); and
Breach of quiet enjoyment (because Ds possession was disturbed by O).
(c) D cannot sue B on any covenants whatsoever because B conveyed a quitclaim deed to C.
Note: It is likely that D would choose to sue C in this situation because a suit against C is the only way D will be able to
recover her full purchase price (but not the market value of $24,000). Any damages won against A will be limited by the
rule on damages, which is that damages are always limited to the amount the warrantor received. Because A only
received $15,000, A will only have to pay anyone who sues on the warranties $15,000. However, if D cannot find C to
sue (e.g., C has skipped the country), then D might choose to sue A in order to cut her losses.
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GWD QD GWD O ousts D. Land worth $24K.
A B C D
$15K $12K $20K
Result: C is out of luck, even if D sues C and recovers. Is this fair? Yes. Why? Because C
received a quitclaim deed and took the risk that B would not have superior title. If C was worried
about title problems, C should have (a) demanded a general warranty deed from B or (b) passed
a quitclaim deed or special warranty deed to D.
(b) C can never sue A on future covenants because C was not disturbed in possession. Therefore, no
future covenants have been breached with regard to C.
(c) C cannot sue A on present covenants until D sues C because the causes of action for breach of
present covenants have been assigned to D:
(1) If D sues C and recovers $20,000, C can sue A for $15,000 (the amount A received from B)
because the causes of action have been reassigned to C. C can only sue on present
covenants {note b above}:
Breach of seisin (because A did not have title when A conveyed to B);
Breach of right to convey (because A did not have the right to convey when A conveyed to
B).
(2) If D sues A and recovers $15,000, C cannot sue A at all because the causes of action for
breach of present covenants have been extinguished by Ds suit against C. Therefore, no
causes of action remain to be reassigned back to C.