by Michael W. Flynn
First, a disclaimer: Although I am an attorney, the legal information in this podcast is not intended to be a substitute for seeking personalized legal advice from an attorney licensed to practice in your jurisdiction. Further, I do not intend to create an attorney-client relationship with any listener.
Today’s topic is constructive delivery. Maria wrote:
Last week, I signed up with a rental agency to help me find an apartment. I found a great place and told the rental agent that I wanted it. The agency approved me, and gave me the lease to sign, which I did. I gave the lease back to the agency to get the owner to sign. The owner signed it and gave it back to the rental agency, but the agency never gave it back to me. The bottom of the lease said that the lease was not effective until the signed lease was “delivered” to me by the owner, and that the owner could still find other renters between the time he signed it and “delivered” it.
After he signed the lease, the owner found a family friend that wanted to live in the apartment, and told the agency not to give the lease to me. Now, he will not honor my lease because the rental agency never gave the signed lease back to me. The owner says that he never “delivered” the lease because he only gave it back to the rental agency, but not to me. Is this fair?
Maria has effectively asked whether the act of handing the signed lease back to the rental agency constitutes “delivery” under the law. The short answer to your question is that what the owner is doing is not only unfair, but violates the terms of the contract. When the owner signed the lease and gave it back to the rental agent for the purpose of giving it back to you, the owner delivered the lease and the contract became binding on both of you.
Delivery of documents under the law can be either actual or constructive. Actual delivery is easy to spot; it occurs when someone physically hands you a document with the intent to hand it over. So, if the owner had signed the lease and handed it back to Maria, then actual delivery would have taken place, and the lease would have become immediately effective.
But under the law of most states, delivery is not confined to physically handing something over. Rather, delivery is a question of intent. Constructive delivery occurs when a person shows a present intent to unconditionally divest himself of his property, and to relinquish all control over it. When the owner signed the document and gave it to the rental agency with the intent that the agency would pass it along to Maria, the owner constructively delivered the leasehold interest to Maria. After the lease was constructively delivered, the condition that the lease would only become effective upon “delivery” was fulfilled. The moment the owner handed that lease to the agency, the lease became effective. Maria’s lease is valid, and the owner is stuck with Maria as a tenant for as long as the lease term runs.
Constructive delivery is an important concept in land transfers. To effectively convey a grant of land, aka real property, most states require that the deed must be “delivered.” But, delivery in this context can also be actual or constructive, and the intent of the parties will control.
This issue often comes up in disputes over wills. Imagine the following scenario: Dad wants his ranch to go to his daughter, but wants to live there until he dies. So, Dad executes a deed in favor of the daughter and puts it in his safety deposit box with instructions to give the deed to the daughter when he dies. After he dies, the family finds a will that gives all his property to the local church. The question becomes whether Dad delivered the deed to the daughter when he executed it, but only put it in his safety deposit box instead of giving it to her.
A court looking at this case would not focus on the time at which the deed was physically given to the daughter. The court would focus on what Dad intended when he wrote and signed the deed, and put it in his safety deposit box. Most courts looking at this situation would agree that Dad constructively delivered the deed to his daughter when he signed it and put it away for safekeeping.
This is different from the situation where Dad simply promises to give his property away at a later date. In that situation, a court would not find any constructive delivery of a deed because Dad did not exhibit the intent to presently give away his property. He only exhibited a future intent to do so, which cannot constitute constructive delivery.
In Maria’s situation, the owner exhibited a present intent to give away the leasehold interest in the apartment, and thus delivery occurred. The owner might argue that the delivery was not valid because he changed his mind, and so his signature was only conditional. Most courts would reject this argument because once the owner signed the lease, he gave up the leasehold interest. It was no longer his to place any conditions on. If he wanted to condition his signature, he should have done so expressly.
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