Restrictive Covenant vs Warranty against Encumbrances made multiple owners ago

[concern_citizen]

What is the name of your state (only U.S. law)? MD

The house I bought has a recorded covenant that was not disclosed by the title company before the sale. After the sale when I inquired about the existence of a recorded covenant, the title company pulled the back file and provided a 100+ page covenant (covering multiple properties in the neighborhood) that the abstractor supposedly located during the title search. This 100+ page covenant document was never disclosed to us by the title company before or during the closing.

Also, the previous owner who placed the home under covenant (5+ owners ago) warrantied in their deed to the next owner the following: and the said parties of the first part hereby covenant(s) that they have not done or suffered to be done any act, matter or thing whatsoever, to encumber the property hereby conveyed; that they will warrant specially the property hereby granted, and that they will execute such further assurances of the same as may be requisite." Subsequent deed transfers all had the same language with regard to not placing any encumbrances or suffering any encumbrances on the property.

Do I have any recourse about the covenant, with either the title company or the previous owner(s)?

 

[justalayman]

First, what type of deed was used? It sounds like a limited warranty deed rather than a general warranty deed.


As to anything available to you;

You are bound by the covenants most likely due to a clause that is almost always included in deeds; subject to liens, encumbrances, [and a few different things] of public record. The covenants obviously fall under this statement.

So, what you have sounds like an issue the title company could be liable for.

The problem: what is the remedy?

And that's a question I'm posing actually to you. What would you see as a "fix" to the resulting situation? Each person has their own take on what it would to take care of the problem so what would it take to fix this for you?

 

[FlyingRon]

Unless you bought owner's title insurance, the title insurance company has NO liability to you. If you weren't the one who paid for the title search, they don't have a duty to show anything If you do have title insurance, read the policy to see if such was covered. Depending on just what this covenant covers, it may not mean anything with regard to the warranty deed. Since the devil in the details, I suggest a lawyer who can see them and knows what additional to look for is the best bet.

 

[concern_citizen]

First, what type of deed was used? It sounds like a limited warranty deed rather than a general warranty deed.
****I believe it was a limited warranty deed (I am proffering that based on the verbiage included in the deed)****

As to anything available to you;

You are bound by the covenants most likely due to a clause that is almost always included in deeds; subject to liens, encumbrances, [and a few different things] of public record. The covenants obviously fall under this statement.
****This clause was not in the deed****

So, what you have sounds like an issue the title company could be liable for.

The problem: what is the remedy?
****One remedy would be to attempt to obtain a court order to nullify the restrictive covenant- potentially the title company could assist in this legal action?****

And that's a question I'm posing actually to you. What would you see as a "fix" to the resulting situation? Each person has their own take on what it would to take care of the problem so what would it take to fix this for you?

 

[justalayman]

You cannot obtain anything to nullify the covenants so what's your next best means of addressing this?

 

[concern_citizen]

You cannot obtain anything to nullify the covenants so what's your next best means of addressing this?
****Anything? A court order can****

 

[FlyingRon]

You cannot obtain anything to nullify the covenants so what's your next best means of addressing this?
****Anything? A court order can****

And how do you expect to do that. The fact you were ignorant (for whatever reason) won't be justification to vacate them. Neither would any assurances given to you by the sellers. About the only way the covenants would be vacated by the court would be if the affected parties agreed to vacate them or they were found to be illegal when enacted or otherwise illegal (such as bars against certain people by race, etc...).

 

[concern_citizen]

Unless you bought owner's title insurance, the title insurance company has NO liability to you. If you weren't the one who paid for the title search, they don't have a duty to show anything If you do have title insurance, read the policy to see if such was covered. Depending on just what this covenant covers, it may not mean anything with regard to the warranty deed. Since the devil in the details, I suggest a lawyer who can see them and knows what additional to look for is the best bet.
****Just looked at the HUD-1 and confirmed that we paid for Owner's title insurance; next step will be finding a copy of it since I agree the devil is in the details****

 

[justalayman]

You cannot obtain anything to nullify the covenants so what's your next best means of addressing this?
****Anything? A court order can****

No, a court order cannot. It is not an option so next choice b


At most a court can do is rule them unenforceable but to do that somebody will have to be trying to enforce them where you will have to attempt to defend your position.

 

[concern_citizen]

And how do you expect to do that. The fact you were ignorant (for whatever reason) won't be justification to vacate them. Neither would any assurances given to you by the sellers. About the only way the covenants would be vacated by the court would be if the affected parties agreed to vacate them or they were found to be illegal when enacted or otherwise illegal (such as bars against certain people by race, etc...)

****This was the reason I asked the question about the owner (multiple owners ago) who originally subjected the property to the restrictive covenant, but then warrantied that they had not encumbered the property when they sold the property to the next person in the chain of title****

 

[FlyingRon]

****Just looked at the HUD-1 and confirmed that we paid for Owner's title insurance; next step will be finding a copy of it since I agree the devil is in the details****

If you can't find it, call the people who handled the closing. They probably know who the insurer is (if they don't have a copy in their files).

 

[concern_citizen]

No, a court order cannot. It is not an option so next choice b


At most a court can do is rule them unenforceable but to do that somebody will have to be trying to enforce them where you will have to attempt to defend your position.

****Someone IS trying to enforce them****

 

[concern_citizen]

If you can't find it, call the people who handled the closing. They probably know who the insurer is (if they don't have a copy in their files).

****Makes sense, thanks for the advice. But what happens if the title company (who insured the property) pretends that they fully represented it before closing? They provided the 100+ page restrictive covenant after closing (upon our request), not before. I don't believe there was any mention of the covenant in the title opinion letter****

 

[justalayman]

No, a court order cannot. It is not an option so next choice b


At most a court can do is rule them unenforceable but to do that somebody will have to be trying to enforce them where you will have to attempt to defend your position.

****Someone IS trying to enforce them****

So tell them to go away enough times until they sue you to enforce them. Then call your title insurance company looking for them to provide your legal representation


Trying to invoke a deed written from a prior owner to a previous purchaser is not applicable to you. The warranty was to that purchaser. For all you know they settled the issue between themselves long ago.


From that point forward the owner could transfer no more rights than they possessed and it sounds like each warranted title only during their time of ownership (limited warranty deed).

Due to that you are bound to matters of public record which is where your title insurer comes into play. If they missed something that is there error and that is who you seek redress from. Since relieving you from an obligation to comply with the covenants is not within their power, what would you ask of them to settle the matter?

 

[concern_citizen]

So tell them to go away enough times until they sue you to enforce them. Then call your title insurance company looking for them to provide your legal representation

****HOA won't sue until I start building what I want to build. They are lying in wait****


Trying to invoke a deed written from a prior owner to a previous purchaser is not applicable to you. The warranty was to that purchaser. For all you know they settled the issue between themselves long ago.

****It is applicable insofar as the previous title company made a guarantee of no encumbrances to someone in my chain of title. Maybe that title company could be at fault? The part about the previous owners (multiple owners ago) making further assurances against encumbrances is interesting...****


From that point forward the owner could transfer no more rights than they possessed and it sounds like each warranted title only during their time of ownership (limited warranty deed).

****Yes they all seemed to be limited warranty deeds thereafter****

Due to that you are bound to matters of public record which is where your title insurer comes into play. If they missed something that is there error and that is who you seek redress from. Since relieving you from an obligation to comply with the covenants is not within their power, what would you ask of them to settle the matter?

****A dollar amount? Legal representation once suit is brought against me? Legal representation if I choose to sue HOA preemptively?****