Dead Granny's Deed

It was a standard title order. $94,000.00 purchase price; $76,000.00 mortgage. The order said Gertrude Stilth was the record owner but the search showed title in Mabel Gramms. The call came in from the seller’s counsel soon after the commitment was printed.

“Mabel was the grandmother of Gertrude.” “It seems that the deed from Mabel to Gertrude never got recorded.” Soon after, a copy of the deed appeared on the fax.

It looked recordable. It had all the state requirements for recordation, and the signature was properly notarized. It’s was dated in 1995, reflecting consideration of one dollar.

The original unrecorded deed from Mabel into Gertrude was recorded simultaneously with the deed from Gertrude to the insureds.

The claim letter came in before the policy came out of typing.

The Executor of Mabel’s Estate claimed that the deed into Gertrude was invalid. The argument was that Mabel was incompetent at the time the deed was signed.

The insureds were rather agitated when they were served with the pleadings that said that they could lose their house. They must have thanked the Lord for title insurance after they calmed down.

Depositions were taken before trial. The attorney who prepared Mabel’s Will that was signed after the time of the 1995 deed, testified to Mabel’s competency and capacity to sign. She knew what she was doing. That testimony at trial would make it easy to defeat the incompetency claim. The case was looking pretty good….. Then came Gertrude’s deposition.

Under questioning by the estate’s counsel, Gertrude testified that the deed from her grandmother was intentionally not recorded. Her grandmother gave her the deed back in 1995 to protect her home if she ever had to go into a nursing home.

The deed was not to be recorded unless Mabel and Gertrude agreed to do so. And Mabel died before she authorized the recording.

So much for getting off easy!

As many litigated matters go, this one was settled before the date of the trial. For the Estate, it was a bird in the hand. Gertrude threw in some dollars. $19,000 was paid under the title insurance policy. All in all, a far cry better than risking a $94,000 total failure at trail.

Delivery is the key. Has the grantee had the authority to record all along? Was the deed validly delivered”? If not, the deed could be held to be invalid. Not something a title insurance company would want to insure.

Claims happen. That’s why there is title insurance.