COLOR OF TITLE

I would appreciate your thoughts on a proposed deed. The owner/grantor obtained title to two adjoining acreage tracts by two separate conveyances, one by warranty deed and one by quitclaim deed. Grantor and grantee want to transfer the acreage tract received by quitclaim deed in a manner to satisfy the requirements of TCA § 28-2-101 (an assurance of title purporting to convey an estate in fee) in order to commence the seven year period. Thus, I have prepared a warranty deed. To minimize to grantor's risk, the deed states that the covenants of title expire in seven years, and that the liability will not exceed a specified sum. Do you have any recommendations or suggestions regarding the transfer?

Interesting question. Haven't had this issue before and can't say for sure this works, but here are a few thoughts. First, to have a good color title claim, a grantee has to take with the good faith belief that the grantor owns the fee. I assume that's the case here. Second, the six year statute of limitations for breach of the first three covenants of title (seisen, right to convey, and against encumbrances) begins to run when the deed is delivered. Thus, it seems to me that you'd only need to limit the grantor's exposure on the covenant of warranty, which begins to run when possession is disturbed. You could do that by adding the phrase "provided such claims are made within seven years" at the end of that covenant. Finally, the grantor's liability would be limited to the consideration received in any event, so it's probably not necessary to add the monetary limitation. If the grantor wants it, however, you could add something like "and provided grantor's liability will not exceed $__________."