Key Takeaways

  • The covenant of further assurance is a future covenant in property law that obligates a seller (grantor) to take necessary steps or provide documents after a sale to perfect the buyer’s (grantee’s) title.
  • It ensures the original intent of a contract is fully realized even if additional actions — like signing new documents or correcting title issues — are needed after execution.
  • This clause is commonly found in warranty deeds and commercial agreements to prevent future disputes and streamline property transfers.
  • While it cannot replace core contract provisions, it provides a safety net for unforeseen requirements that arise after signing.
  • Breach of the covenant of further assurance can result in legal remedies, including specific performance, damages, or rescission.

A further assurance clause is included in many contracts when it is necessary to make sure everybody involved carry out the necessary actions and cooperate to meet the contract's intentions.

What Is a Further Assurance Clause?

Further assurance clauses normally require all parties involved to act cooperatively and complete any actions that are deemed necessary once an agreement has been executed to make sure that the agreement's original intent is fully realized. A further assurance clause is sometimes referred to as a "necessary acts clause" and is usually included in contracts to act as a catchall that can be utilized to make sure parties do things like signing documents and performing acts that aren't otherwise listed in the contract.

Clauses of this nature are useful for two main reasons. First, they require an act to be carried out in the future that was not anticipated at the time of signing. Second, they prevent the need to draft contracts in excruciating detail.

However, a further insurance clause can't be used in place of important provisions that you may have overlooked when drafting the contract. A further assurance clause can also make provisions to request "assurances" of performance or competency in the event that one party begins to feel uncomfortable with the other's ability to carry out the requirements of the contract. If one party learns that the other is facing financial trouble, for example, the further assurances clause allows them to request assurances from the party in question to prove that no financial problems actually exist.

A further assurance clause may appear in a number of different places within a contract. Examples of areas of a contract that these clauses might show up in include:

In some cases, it is possible to find a further assurance clause in more than one place in a contract and with inconsistently listed terms.

Purpose and Legal Importance of the Covenant of Further Assurance

The covenant of further assurance is a crucial component of many property and commercial contracts because it extends the obligations of the parties beyond the initial execution of the agreement. It ensures that the seller (or any other obligated party) must take any additional steps necessary to perfect the transaction, even if those steps were not explicitly anticipated when the contract was drafted.

This covenant is particularly important in real estate transactions. After the deed is delivered, issues may arise that prevent the buyer from receiving clear title — such as missing documents, undisclosed liens, or administrative errors. The covenant of further assurance empowers the buyer to compel the seller to correct those issues without initiating a new agreement.

In commercial contexts, the clause also serves as a protective mechanism. It ensures cooperation for regulatory filings, intellectual property assignments, or post-closing corporate actions that are necessary to fully implement the agreement. This broad applicability makes the covenant a valuable risk-mitigation tool for buyers and investors.

How the Covenant Operates in Real Estate Transactions

In real estate law, the covenant of further assurance is typically one of the six covenants of title included in a warranty deed. It obligates the grantor to execute and deliver any additional instruments or take necessary legal steps to ensure the grantee’s title is secure.

For example, if a seller fails to release an old lien or needs to sign a corrective deed to resolve a boundary discrepancy, the covenant requires them to do so at their own expense. This ensures the buyer can enjoy full, undisputed ownership of the property.

Key points about how the covenant operates include:

  • Proactive Cooperation: The seller must assist in removing any future title defects or legal obstacles.
  • No Time Limitation: The obligation can extend indefinitely as long as issues arise from the original transaction.
  • Enforceable Promise: Courts can compel performance or award damages if the covenant is breached.

Because of these protections, the covenant of further assurance is often viewed as a buyer-centric provision that enhances trust and legal certainty in property transfers.

What Are the Six Covenants of Title?

Warranty deeds are legal instruments that outline a seller's guarantee that they are the rightful owners and that there are no liens against the property they intend to sell. The following assurances comprise what is known as the six covenants of title:

  • Seisin
  • No encumbrances
  • Right to convey
  • Quiet enjoyment
  • Warranty
  • Further assurances

The first three are known as "present covenants," meaning that they can apply all parties involved in the latest transfer of the property. The last three are known as "future covenants." These can be enforced by the current owner against the party that has previously owned the property in the event that they're not upheld.

Seisin

This clause confirms that the seller rightfully owns the property they intend to sell. This concept is not new. In fact, its origins can be traced back to laws that were established in feudal England. The Seisin clause applies both to the title and to the right to possess the property.

No Encumbrances

This clause outlines a promise that the seller owns the land free and clear. In other words, the property isn't subject to any of the following:

  • Liens
  • Easements
  • Taxes
  • Mortgages
  • Leases
  • Any other restriction that might impinge on the buyer's rights to possess or obtain a title for the property

Easements are a certain type of encumbrance that might have an effect on the buyer's ability to make physical use of the land. Liens are an encumbrance that may have an effect on the buyer's ability to obtain a title for the property.

Right to Convey

This clause outlines the seller's legal right to transfer ownership to a buyer. In order to have the right to convey, the seller needs to be in possession of the property's title. This clause is in place to assure buyers that a seller has the right to sell the property to them. In other words, if another party presents legal interests in the property, the seller is considered to be in breach.

Quiet Enjoyment

This clause provides a buyer with the assurance that their right to possess the property won't be negatively impacted by any legal claims made against the property by a third party. If somebody does make a legal claim against the property, the seller would be held liable, not the buyer.

Breach and Remedies for Failure to Provide Further Assurance

Failure to honor the covenant of further assurance can have significant legal consequences. If a grantor refuses or neglects to take necessary actions after the transfer of property, the grantee may seek remedies through the court system. Common remedies include:

  • Specific Performance: A court may compel the grantor to execute documents or perform acts required to perfect the title.
  • Monetary Damages: The grantee may recover financial losses incurred as a result of the grantor’s failure to comply.
  • Rescission: In rare cases, the court may void the transaction entirely if the breach undermines the fundamental purpose of the agreement.

Because enforcement actions can be costly and time-consuming, it is in both parties’ interests to clearly define the scope of the covenant of further assurance during contract drafting. Doing so reduces the risk of future disputes and strengthens the enforceability of the buyer’s rights.

Drafting Best Practices for Further Assurance Clauses

When drafting a covenant of further assurance, precision and clarity are essential to ensure enforceability. Best practices include:

  • Define Specific Obligations: Clearly outline the types of actions the grantor may be required to perform, such as executing documents, obtaining consents, or resolving title defects.
  • Allocate Costs: State who will bear the expenses associated with performing further assurances — typically, the grantor.
  • Set Reasonable Timeframes: While the covenant is a future obligation, including practical time limits for performance can prevent indefinite liability.
  • Include Dispute Resolution Terms: Provide a mechanism, such as mediation or arbitration, to address disagreements over the scope or timing of further assurances.

By incorporating these elements, parties can reduce uncertainty and ensure the covenant of further assurance functions as an effective safeguard rather than a potential source of conflict.

Frequently Asked Questions

  1. What is the covenant of further assurance?
    It’s a future covenant that obligates a seller to take additional steps or provide documents after a sale to ensure the buyer’s title is clear and secure.
  2. Is the covenant of further assurance legally binding?
    Yes. It is a binding promise in property and commercial contracts. Courts can compel compliance or award damages if the covenant is breached.
  3. How is it different from other covenants of title?
    Unlike present covenants (e.g., seisin or right to convey), which apply at the time of transfer, the covenant of further assurance is enforceable after the transfer if additional actions are needed.
  4. What happens if a seller refuses to provide further assurance?
    The buyer can pursue legal remedies, including specific performance, monetary damages, or in rare cases, rescission of the transaction.
  5. Should the covenant always be included in a deed?
    While not legally required, including it is highly recommended because it provides long-term protection and reduces the risk of post-closing disputes.

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