Distinguish Present and Future Covenants in a Deed
A deed always conveys title to a grantee; that’s what makes it a deed. But a deed also often includes covenants, or warranties, about the title it conveys. These covenants promise the grantee that if the grantor’s deed can’t convey the described title to the grantee (whether in whole or in part), the grantor will pay damages to the grantee.
The covenants of seisin, of right to convey, and against encumbrances are called present covenants. The other three covenants — the covenants of quiet enjoyment, warranty, and further assurances — are called future covenants.
Breaching present and future covenants
The present covenants all promise that title defects don’t exist at the time that the grantor gives the deed to the grantee. The mere existence of a title defect breaches these covenants. That’s why they’re called present covenants, because they’re covenants about the present state of title.
The grantor doesn’t promise that title defects won’t arise in the future, of course — the grantor has no control over what happens with title to the property after he conveys it to the grantee. He promises only that such defects don’t exist at the moment that he hands the property over to the grantee.
That means that a present covenant is breached at the moment the deed conveys title, if ever. At that moment, either breaching title defects exist or they don’t.
The future covenants, on the other hand, promise that no one with a valid interest in the property will interfere with the grantee’s use of the property. So these are covenants about the future — promises that after delivery and acceptance of the deed, no such owner of a valid legal interest will come along and interfere (or in the case of the covenant of further assurances, that the grantor will comply if the grantee demands reasonable further assurances).
Future covenants therefore are breached only when a valid interest holder interferes with the grantee’s use of the property. This kind of interference is commonly called an eviction, although it doesn’t mean that the grantee has to be kicked off the property.
Even if a grantee discovers a serious title defect, such as an easement that effectively prevents the grantee’s intended development and use of the land, the defect itself doesn’t breach the future covenants. They’re breached only when the owner of the easement asserts the interest in some way that interferes with the grantee’s use.
Here are some examples of circumstances that qualify as evictions:
The interest holder lawfully interferes with the grantee’s use and possession.
The interest holder constructively evicts the grantee by asserting his rights in the property somehow.
The grantee gives up possession to, or buys the rights of, a valid interest holder.
Some courts say that the grantee’s inability to perform her contract to sell good title to another is an eviction; others say it isn’t.
The grantee subsequently gives a warranty deed to someone else, and when the title defect emerges, the grantee pays damages for breach of her own deed covenants to the subsequent grantee.
The government holds a valid legal interest in the property. Normally the interest must be asserted somehow, but the government’s mere ownership of a legal interest in the land is considered a breach of the future covenants.
The grantor wrongfully interferes with the grantee’s use and possession. Wrongful interferences by third parties — interferences that aren’t the result of a valid interest in the property enforceable against the grantee — don’t breach the future covenants. But the grantor’s own wrongful interference does violate the covenants of warranty and quiet enjoyment.
Authorities often say that the future covenants are covenants against interference by “paramount” or “superior” titleholders. That doesn’t mean that the interference must come from someone who has a more substantial interest than the grantee. It simply means that the interference must come from someone who has an interest in the property that’s enforceable against the grantee.