Legal Question in Real Estate Law in California
Does a 'no warrenty' statement in an REO sales agreement elminate the rights of the implied warrenty of a grant deed?
The situation is this: We purchased a repo from a bank, and the sales agreement had a 'no warrenty' section in it. Two weeks after escrow closed, we discovered that a RV/shop guesthouse conversion on the property had not been properly permitted, and back building permit fees, traffic impact fees, and school fees are due, to the tune of around $10k. We cannot pull any building permits until this is resolved. The title to the property was awarded on a simple grant deed, with no restrictions. By signing a sales agreement with a 'no warrenty' stipulation in it void our implied warrenty rights under the grant deed?
2 Answers from Attorneys
The implied warranties of a grant deed probably wouldn't cover the matters you mention anyway.
There are two implied warranties: (1) The grantor has not previously conveyed the property, or any interest therein, to anyone else in conflict with the interest being granted; and (2) at the time of the conveyance, the property is not burdened by anyencumbrances "done, made or suffered by the grantor ."
Although the second of the warranties might seem to cover your problems, it probably doesn't, because it is limited to encumbrances that began during the ownership of the grantor. Since the bank probably hasn't owned the property very long, more likely than not the various issues predate its ownership and are thus not within the implied warranty.
I agree with Mr. Whipple. The use of the word "grant" in a deed, carries with it two implied warranties, a covenant that the property has not been previously conveyed to someone else, and a covenant that there are no encumbrances. Those implied warranties have nothing to do with your problem.
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