Re: Tenant has L/O for my house – help! - Posted by JPiper
Posted by JPiper on January 15, 2000 at 03:32:49:
I agree with a statement below by Joe?.in my state leases in excess of one year have to be recorded. Further since this is an unrecorded contract, the issue I would be concerned about vis a vis the title insurance and the validity of your deed is whether there was ?constructive notice? regarding this lease option. Constructive notice basically means that the information was available and that you could have reasonable known it. For example, let?s assume that the sister/optionee executed the lease/option, and then took possession of the property. Let?s further assume that that she was in possession and living in the property at the time you viewed the property. I think it?s possible if these were the facts that it could be construed that an unrecorded contract has precedence over your deed. And it?s also possible that the title insurance might be ineffective in this particular type of case.
However in your case, it doesn?t sound as if there was constructive notice. It sounds as if this woman came out of the blue. This is exactly what title insurance is for. I wouldn?t be too concerned about this?.except to say that I would definitely notify the title company. Who occupied the house at the time of sale? If it wasn?t the so-called optionee, who was it? Did a lease exist? These may be important facts.
Incidentally, a warranty deed contains certain warranties. One of those is the ?covenant of seisin??through which the grantor warrants that he is the owner and has the right to convey title to the property. If this warranty is broken, the grantee can recover damages up to the full purchase price. Further, a warranty deed also guarantees that the grantee may recover damages if the title fails at any point in the future. There is also a warranty against encumbrances other than those specifically stated in the deed. A breach of this warranty would entitle the grantee to sue for expenses to remove the encumbrance. The point is that the title insurance is one level of guarantee?.but another level is the warranties associated with the deed itself.
It might be interesting to speak with your attorney?.see if there is some type of quick action that either you or the title company could file that would tie up any funds or other assets of the mother AND the attorney-in-fact pending a resolution of this situation. And by the way, one of the damages I would be claiming IF it ever came to this would be the built in equity that existed at the time of purchase.
Understand that you currently possess the property?.this woman will have to press her claim. Whether she?s willing to do that remains to be seen. My guess is she won?t.