Closing is a straightforward concept. A deed of conveyance is exchanged, typically for a sum of money. For a deed of conveyance to be valid, it must be (1) in writing, (2) state the names of grantor and grantee, (3) provide an adequate legal description, (4) intent to deliver the deed (words of grant such as convey), (5) actual or constructive delivery, and (6) acceptance of delivery. Typically after a deed is conveyed, it is recorded, although this is not necessary to create an interest in the property.
Most attorneys use checklists to keep track of all the documents necessary to complete closing. Typically, the checklist will include:
Merger
Once the deed has been made, all the preexisting agreements between the parties within the executory period are merged into one final document, the deed. This doctrine is true unless there has been (1) a mutual mistake between the parties, (2) fraud, (3) ambiguity as to the meaning of the terms, (4) existing rights collateral to the contract of sale, or (5) there is a provision in an earlier agreement stating that it survives closing. If there is a showing of any of these factors, then parol evidence may be utilized to show the true intent of the parties. The following case addresses two of these principles, mutual mistake and ambiguity.
Panos v. Olsen
123 P.3d 816 (Utah App. 2005).
Question
Whether there was ambiguity or a mutual mistake between the parties requiring parol evidence to be utilized to determine the contract terms.
Rule
The deed merges all preexisting agreements unless there is ambiguity, fraud, a mutual mistake, or preexisting rights subject to the contract of sale. Here, there is only a claim of ambiguity or mutual mistake.
Ambiguity is defined as a term that may have more than one meaning. This will not add a term that was already lacking.
A mutual mistake must be mutual between all the parties as to the meaning of the term. The standard of showing whether there is a mutual mistake is clear and convincing evidence shown by the party claiming a mutual mistake.
If either is shown, parol evidence may be used to add additional information regarding the intent of the parties.
Holding
There was no ambiguity or a mutual mistake so parol evidence may not be utilized; affirmed.
Facts
Panos sold an adjacent lot to Olsen. In the contract for sale, it restricted any home built on the lot to not exceed 32 feet as measured from the road. When the deed was conveyed, it contained the same language. Olson built a home. From the Panos survey (which is unclear whether Olsen was provided with the survey), the home was measured to be 34.91 feet high from a monument. However, from the Olsen survey, the home was measured to be 31.96 feet high from a gutter along the road.
According to Panos, the two had discussed orally that the measurement was to be taken from the monument. Olsen has no recollection of the discussion.
Analysis
The term is not ambiguous because it may reference any spot along that road. There is nothing there saying that multiple measurements are used twice. Again, there is no mutual mistake because Panos failed to show with clear and convincing evidence that the term was unknown. For these reasons, the doctrine of merger is not excused and the judgment of the trial court is affirmed.
Estate of Myers v. Estate of Myers
440 N.W.2d 617 (Iowa App. 1989).
Robert Myers was caring for his mother and living with her. While all parties were still alive, Robert’s siblings conveyed their interest in the home to him in the event of their mother’s death. The mother died and the home was owned by Robert. Eventually, Robert died. Now the question is whether the home goes to Robert’s brother or daughter. At trial, parol evidence was admitted to show that Robert intended the home to be returned to the possession of his brother upon Robert’s death. However, there was no written indication to this matter.
So, the parol evidence rule is only admissible if the language in the contract is ambiguous. Here, the language was not ambiguous and clearly the home passes intestate to the daughter. Reversed and dismissed.
Kinzler v. Pope
No. No. 09-1818, 2010 WL 3503453 (Iowa App.)
Pope sold land to Kinzler on an installment contract basis. The land was split by a country road and Pope retained a life estate in the southern portion of the land where the Kinzlers did not reside. Once the Kinzlers finished paying the installment contract, Pope executed a deed of satisfaction conveying interest in the land. This deed did not contain the clause of a life estate that was in the original installment contract. So, the Kinzlers are arguing the life estate was extinguished and Pope had no right to any portion of the property.
On trial, the court held that the life estate portion of the contract was collateral to the agreement (necessary) and therefore was brought into the merger. However, attorney fees were not permitted. So, Pope won but was not awarded attorney fees.
On appeal, the court says that the attorney fees provision also should have been included because both parties argued in their pleadings that attorney fees ought to have been required. This shows that the provision was collateral for both parties and should have been included with the new contract. Reversed and remanded to determine the attorney fees in favor of Pope.
Escrows
There are three different types of escrows: (1) Loan escrow, used to collect and hold money for taxes and insurance; (2) escrow closing, where a hired escrow agent holds documents and money to close the transaction; (3) contingency closing, where the escrow agent is used to resolve problems that occur before closing but were not fixed until after (e.g., funds for repairs agreed to be made before closing but did not get to them until after closing).
The challenge escrow agents have is their fiduciary duty to care for the funds of the parties.
Miller v. Craig
558 P.2d 984 (Arz. App. 1976).
Question
Whether the escrow agent breached his fiduciary duty and whether he was excused because of reasonable prudence.
Holding
There was a breach and it was not excused, reversed.
Facts
Miller entered into an agreement with Crouse to sell their interest in some property. Craig was retained to draft documents and be an escrow agent associated with the transaction. To facilitate the transaction, Crouse deposited $5,000 in Escrow to Craig. Backing out of the transaction, a dispute arose between Crouse and Miller. Crouse won a judgment and Craig delivered the $5,000 to Crouse without asking Miller for permission. Miller appealed the lawsuit and won. He then attempted to recover the $5,000 from Craig but was unsuccessful, the basis for this lawsuit.
Analysis
Craig had a duty to preserve the finances until everything had been finalized. Once there was a judgment, Craig should have asked the Millers if they planned on an appeal, and if so, whether he had the authority to transfer the finances. Here, Craig took no actions to preserve Miller’s interest and therefore was liable.
Disclaimer
The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.
