Question

How does the doctrine of relation back help avoid problems caused by liens that attach to the property between the times of the first and second deliveries in escrow transactions?

A. Escrow agents are required to settle all claims that could potential result in liens.

B. Liens cannot be attached to properties held in escrow.

C. The grantor's title is deemed to extend to the second delivery.

D. The purchaser is deemed to have taken title at the first delivery.

Answer 1

The doctrine of relation back deems that the purchaser in an escrow transaction has taken title at the time of the first delivery. This prevents liens that may arise after that point from affecting the property because the legal ownership is acknowledged from the first delivery.

Step-by-step explanation:

The doctrine of relation back is a legal principle used in escrow transactions to help avoid the potential issues created by liens that attach to the property between the first and second delivery. This doctrine essentially states that the transfer of title relates back to the date of the first delivery into escrow. Thus, any liens that arise after the first delivery but before the second are prevented from affecting the buyer's interest in the property, because the buyer is deemed to have taken title at the time of the first delivery.

The correct answer to how the doctrine of relation back helps to avoid problems caused by liens in an escrow transaction is option D: The purchaser is deemed to have taken title at the first delivery. This means that the purchaser's title interest is protected from any liens that might arise after the fact because the legal ownership is recognized from the first point of delivering the documents or deposit into escrow, not at the second or final delivery when the transaction is completed.