4.24 Delivery

4.24.1

In General

Delivery is the legal act of transferring ownership. Documents such as deeds and mortgages must be delivered and accepted before becoming valid. Legal delivery is not confined to the act of transferring manually the document; rather, it refers to the intention of the grantor. The grantor must intend that the deed be presently operative and effective to transfer title to the grantee, and intend that the grantee become the legal owner.

Actual or Constructive

Delivery may be actual or constructive. An actual delivery occurs where actual possession is given to the grantee, while constructive delivery occurs where the law implies a delivery by reason of the acts or conduct of the parties.

Absolute or Conditional

A delivery may be absolute or conditional. An absolute delivery, is one that is complete on the actual transfer of the deed from the possession of the grantor. Under a conditional delivery, or delivery into escrow, possession is transferred to a third person as agent for the grantor and is not given up to the grantee until a specified occurrence takes place.

Time of Delivery

To be valid, a deed must be delivered during the lifetime of the grantor; otherwise, it is void.

Delivery to Third Persons

The delivery of a deed usually is accomplished by direct delivery to the grantee. However, it can be done by unconditional delivery to a third party for later delivery to the grantee.

4.24.2

Delivery as Required for Title Premium Pass Through

  • Under special circumstances, a title company may use all or part of the title insurance premium in a second by simultaneous transaction.  The rule for such “pass through” of premium is contained in Rate Rule R-2.  The applicable language of R-2 is set out below.  (Note that certain important terms are in bold print for ease of reading).
  • No Company shall charge for a policy in one transaction and withhold issuance of a policy thereon, nor shall any Company charge a premium for a policy in one transaction and apply the charged premium in a subsequent transaction, except when same covers identical land to that contained in the initial conveyance, and when same shall have been consented to by the parties to all conveyances involved, which consent may be provided for in the contract(s) on which the transaction is based, or may be given in a separate written instrument, or may be evidenced by the acceptance and signing of a closing statement clearly setting forth application of the premium charge as agreed by the parties to the transaction(s).
    • The phrase "one transaction" as used in this rule may include more than one conveyance provided: (i) all grantors and grantees have acknowledged in writing the method of application for premium or premiums to be collected, and (ii) all instruments of conveyance relating to the subject property which is to be insured are unconditionally delivered simultaneously.
  • A typical example of the use of this rule would be a case where Party A agrees to sell to Party B who finds a buyer (Party C) during, for example,  a feasibility period.  Party A has agreed by contract to provide title insurance to Party who in turn has agreed to provide title insurance to Party C.  Party B asks the title insurance to allow A’s title insurance premium dollars to be transferred to the B to C transaction.
    • The title company may allow this transfer or pass through if:        
      • Both contracts cover identical land.
        • Note: B to C cannot cover only a portion of the A to C land.
      • Both A and C are aware of the transaction and agree to the pass through in writing.
      • Both transactions close in immediate proximity to one another (usually the same or the next business day) and the closing instructions to the title company both instruct the title company to record the documents in both transactions.
  • Because of mortgage fraud considerations, this rule is primarily used in commercial (not 1-4 family residential) transactions.