Final answer:
The statement is true; the grant deed should state the encumbrances created by the grantor during ownership to avoid liability for implied covenants. Encumbrances such as restrictive covenants and easements must be disclosed and may or may not be agreed to by the grantee within the purchase agreement.
Step-by-step explanation:
To avoid liability arising from the implied covenants in a grant deed, it is accurate that the deed should state the encumbrances on title created by the grantor during their ownership. These encumbrances, which include restrictive covenants and easements, must be clearly communicated to the grantee and are typically addressed within the purchase agreement. Whether or not they are agreed to by the grantee is a matter of the contract negotiations and the final terms of the purchase agreement.
It is crucial to distinguish between encumbrances agreed upon in the purchase agreement and those that are not. If the grantee accepts the encumbrances through the purchase agreement, they are essentially agreeing to the restrictions or obligations placed upon the property. However, failure to disclose such encumbrances may result in liability for the grantor. Therefore, the statement is True.
Restrictive covenants are limitations within a deed that control how a property can be used and may prohibit certain activities. They are historically notable for their role in segregating communities by race and ethnicity, though such discriminatory covenants are now illegal. In current practice, these covenants may govern building aesthetics, land use, and other property-related specifications.