Acme Land Company sold a lakefront lot to Sarah Farris. The date of the sale was July 30, 2013. Acme transferred the lot to Sarah by a limited warranty deed. The deed warranted that the property was free of liens and encumbrances. Acme had owned the lot since March 10, 2007. After the sale, when Sarah was seeking a mortgage loan to build a home on the lot, Sarah discovered that the lot was encumbered by an easement for general public access to the lake. The easement was created in April of 2004 by a previous owner of the lot. The easement reduced the size of the lot for building purposes and reduced its value. Can Sarah sue Acme for breach of a deed warranty?
Fill in the blank(s) with the appropriate word(s).
Sarah would not be successful in her claim for breach of warranty against Acme Land Company. Acme gave Sarah a limited warranty deed. Even though the deed warranted against encumbrances such as the easement, a limited warranty deed only warrants against encumbrances made by the grantor, in this case Acme. The easement was created by an owner of the lot before Acme acquired ownership and was not created by Acme. Acme’s limited warranty does not protect Sarah from the easement.
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