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Posted: August 16th, 2021

General warranty deeds discussion

Assessment Brief Aaron owns a farm. Aaron has given First Bank and Trust in mortgage on the farm. Aaron transfers ownership of the farm to Bob and gives Bob a general warranty deed. The general warranty deed to Bob warrants that there are no encumbrances on the farm and does not mention the mortgage to First Bank and Trust. Bob owns the farm only a short time, and sells the farm by limited warranty deed to Carol. Carol decides that farm life is not for her and sells the farm by general warranty deed to David. The general warranty deed does not mention the mortgage to First Bank and Trust. One week after David purchased the farm, First Bank and Trust notifies David of the mortgage. Is there a breach of any deed warranty or covenant and, if so, which covenant? At this stage, can David sue Carol? Can David sue Bob? Can David sue Aaron? First Bank and Trust, after notifying David of its mortgage, commences foreclosure proceedings to sell David’s farm to pay the debt. At this stage, what deed covenant has been violated, if any? At this stage, can David sue Carol for breach of covenant? Bob? Aaron?

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