General warranty deeds discussion
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?