Legal Memorandum: Right to Assert a Breach of Warranty of Title

Issue: In Rhode Island, whether Buyer #2 waived his right to assert a claim for breach of warranty of title where he had knowledge of Buyer #1’s claim and actually participated in the litigation to defend against such claim.

Whether notice of an existing encumbrance or other outstanding interest in the property at the time the title is received affects the determination of whether there has been a breach of warranty of title depends on the intention of the parties.  Powell on Real Property ‘ 81A.06[3].  If it can be shown that a grantee was aware of an encumbrance or other outstanding interest and agreed to the conveyance with the encumbrance intact, no breach exists.  In effect, the grantee is deemed to have waived his or her right to apply the title covenant to that particular encumbrance or interest.  Id.  However, if the grantee knew of the encumbrance or interest, but believed that the encumbrance or interest would be removed before the conveyance, then the failure to remove it would constitute a breach of the title covenant.  Knowledge alone does not constitute a waiver of the grantee’s right to assert a breach of title covenant.  Waiver of this right occurs only when the grantee agrees to the continued existence of the encumbrance or interest or acts in a way that would prevent him from asserting such a claim.  Id.

The title covenants that are made by a grantor when conveying property by a general warranty deed are codified by R.I. Gen. Laws ‘ 34-11-15 (1995).  The first three covenants (seisin, freedom from encumbrances and authority to sell) are covenants which, if broken at all, are broken at the time of the delivery of the deed.  Lewicki v. Marszalkowski, 455 […]