Further Assurances: Everything You Need to Know
A further assurance clause is included in many contracts to ensure everybody involved will carry out the actions and help meet the contract's intentions.3 min read
2. What Are the Six Covenants of Title?
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:
- Transaction provisions
- The covenants area
- General provisions
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.
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:
- No encumbrances
- Right to convey
- Quiet enjoyment
- 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.
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.
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:
- 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.
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.
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