Thursday, July 9, 2015

What happens when someone conveys real estate that they do not yet own?

Utah Real Estate Law for After-Acquired Title

It is too common that people convey an interest in real estate without actually having that interest or before actually having that interest to convey. Usually, this mistake isn’t caused by malice or fraud, but rather because people sometimes make mistakes while putting together real estate deals in proximity to other transactions. 

General Rule

“[I]t is a basic tenent of property law that [one] could convey to [another] only what it then owned.”  FDIC at ¶19. Also see Drazich v. Lasson, 964 P.2d 324, 327 (Utah Ct.App.1998) (“One can only convey as much estate in land as one actually has.”).  Similar to the classic “Brooklyn Bridge” scams, conveyed interests are generally void if there was no interest to convey.  While you would likely have claims in contract and tort against the party who did not have the promised interest (the “grantor”), your claims would not generally give a right to a third-party’s property.

Utah’s After-Acquired Title Statute

            Exceptions to the general rule exist when there is a connection between the person who failed to convey an interest and the property.  Utah’s after-acquired property statute provides:

“If any person conveys any real estate by conveyance purporting to convey the real estate in fee simple absolute, and at the time of the conveyance the person does not have the legal estate in the real estate, but afterwards acquires the legal estate… the conveyance is as valid as if the legal estate had been in the grantor at the time of the conveyance.” Utah Code §57-1-10(1).
            Essentially, if a person conveys a property that they don’t own but subsequently acquire that property, then the original conveyance becomes valid after-the-fact.  This after-acquired statute only applies to fee simple conveyances, such as a common conveyances through a general warranty deed.  It does not apply to other conveyances, such as trust deeds, liens, or quit-claim deeds. 

Equitable Interests

           Sometimes if the grantor does not have title to the conveyed interest, the improper conveyance will give an equitable interest to grantee, even though title was not effectively conveyed.  See FDIC v. Taylor, 267 P. 3d 949, ¶14 (Utah Ct. App. 2011) (“[T]rust deeds in favor of [the lenders] were ineffective to convey title but, nevertheless, created equitable liens against the Property.”).  Whether an equitable interest has been created is a fact intensive issue which would likely hinge on the effect to innocent third-parties.

            As always, if you have any questions about your situation, you are welcome to contact one of Whiting & Jardine’s real estate lawyers for legal advice.

     For more specific information about this particular subject, please call my office at 801-691-7770 for a free consultation or see the following web pages: 
  1. Whiting & Jardine, LLC Home Page:
  2. Quiet Title:
  3. Liens:
  4. Sales & Purchase Agreements:
  5. Transactions:

Disclaimer: This blog is for general information and educational purposes only.  Nothing in this blog should be construed as legal advice for any particular situation.  The statements in this blog may be generalized, contain speculation, be based on opinion, or be made inaccurate by updates or clarifications to the law.  No attorney-client relationship is created by virtue of this blog.  To receive competent legal advice for your situation, you should seek competent, licensed legal counsel in the appropriate jurisdiction and practice area.

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