Title Covenant Claims - dummies

By Alan R. Romero

Future covenants run with the land, meaning they may be enforced against a grantor even by successive grantees, whereas present covenants don’t run with the land.

Applying the statute of limitations to deed covenant claims

Because only an eviction breaches the future covenants, the statute of limitations period doesn’t begin to run until an eviction occurs. So the grantor may remain exposed to the possibility of such a claim for many years.

A claim for the breach of the present covenants, on the other hand, arises when the deed is delivered and accepted. At that moment, the grantee has a claim because the mere existence of a title defect breaches the covenant, so that’s when the statute of limitations begins to run.

If the owner of the conflicting property interest doesn’t assert it somehow, the grantee may never discover the title defect until after the statute of limitations has passed. In that case, the grantee never has a chance to sue the grantor for breach of the present covenants and may get relief only if she’s evicted and can sue for breach of the future covenants.

Enforcing title covenants against earlier grantors

Present covenants aren’t ongoing promises. They’re promises about the state of title at the moment the deed conveys title to the grantee. So at the time of the conveyance, the grantee either has a claim or doesn’t.

If the grantee subsequently conveys the property to someone else, that subsequent grantee has no claim against the earlier grantor for breach of the earlier grantor’s present covenants, even if the subsequent grantee discovers a title defect and brings a claim within the statute of limitations period.

In theory, the grantee could assign to her subsequent grantee any undiscovered claims against the grantor, but so far most courts haven’t presumed that grantees do so.

Future covenants, on the other hand, run with the land. That is, subsequent grantees can sue any prior covenanting grantor, not just their immediate grantor, for breach of future covenants. Unlike the present covenants, the future covenants clearly are promises about future events. Here are the basic requirements and reasons the future deed covenants run with the land:

  • Horizontal privity: The grantor and the grantee created the future deed covenants in the instrument that conveyed the benefited land to the grantee.

  • Vertical privity: If the grantee subsequently transfers her land to someone else, that subsequent grantee has vertical privity with the original benefited party.

  • The covenants touch and concern the land: The future deed covenants are promises about the title to the benefited land, so the benefit of those covenants can run to successive owners of the benefited land. However, the grantor remains obligated to perform the future deed covenants; the burden doesn’t pass to any successor. The future deed covenants don’t touch and concern any land that the grantor owns, so they’re personal to the grantor.

  • Intent to run: The grantor and grantee presumably intend the future deed covenants to benefit not just the grantee but any subsequent owners. The parties know that an eviction might happen long in the future, after the grantee has conveyed the property to someone else, yet they don’t say in the deed that only the grantee can enforce the covenants.