Estoppel By Deed

Estoppel comes from old french and it simply means to preclude or stop.

In this article I will discuss the 'estoppel by deed'; sometimes referred to as 'after acquired title'.

The doctrine is fairly simple to understand via the use of the following fact scenario:

1) On May 29, 1988, Elton John, the purported owner of Rocket Man Acres, conveys by way of warranty deed to Dave Phillips. Pay attention to the use of the warranty deed.

2) At the time of the above conveyance, Elton was not the owner of Rocket Man Acres.

3) On July 4, 1988, Nikita, a lovely russian female soldier, conveys by way of warranty deed to Elton.

On July 4, 1988, who owns Rocket Man Acres?

Answer: Dave. How?

Reasoning: Although Elton did not own Rocket Man Acres on May 29, he will be estopped from denying his transfer of title to Dave. Elton's use of a warranty deed is the key factor. Although Elton did not technically own the land on the date of his conveyance to Dave, the warranty deed carries with it 3 present and 3 future covenants of title (covered in a prior article). At the heart of estoppel by deed is the fact that the grantor, Elton, has warranted to Dave that he is the owner of the land in fee simple and that he has the right to convey his fee simple interest to Dave. Hence, when Elton received his deed on July 4, it would by considered a formality and the chain of title would continue on with Dave as the owner. This is fair and should strike all readers as very common sensical.

Now, in most states, estoppel by deed will be found either by the use of a warranty deed or by the use of a quit claim deed. Of great importance, the quit claim deed carries with it no warranties, it simply purports to convey what the grantor owns. This is where Michigan case law gets a little funny.

Michigan courts do draw the distinction between the use of a warranty deed or a quit claim deed when the question of estoppel by deed arises. Using the above example, if Rocket Man Acres were located in Michigan, namely beautiful northern Michigan, and Elton had conveyed to Dave via quit claim deed, no title would have transferred to Dave and estoppel by deed would not be found. Why?

Reasoning: The quit claim deed, executed on May 29, will only convey what Elton actually owned, which was nothing. Nothing from nothing equals nothing (sounds like a song title). Now, when Elton receives his deed on July 4, he will be the outright owner, Dave will have no legal interest. When Dave confronted Elton with this, Elton simply said "I guess that's why they call it the blues."

I know, a regular comedian. Anyway, I have been painting all day and am very sore, so I will conclude. Estoppel by deed is a very streamlined and pragmatic doctrine that sounds of good common sense. Whether or not I agree with current Michigan law is not a topic for this article. Estoppel by deed is a technical issue, albeit a very straight forward issue. But like my contracts teacher liked to say, "It's only a problem when it becomes a problem." Cases are brought because there exists competing interests. The use of a warranty deed is always golden to the grantee.

More soon - dave