Deeds and Misdeeds: Lessons from Kovaci v. Estate of Dedvukaj

Introduction

The Michigan Court of Appeals’ decision in Kovaci v. Estate of Dedvukaj highlights critical legal principles regarding deed validity and conversion of funds. This case is particularly significant because most people will encounter deeds at some point in their lives, whether as real estate buyers or sellers, or when dealing with a family member’s estate. It is crucial to understand how to properly effectuate title transfer to real property. While recording a deed provides important legal protections against third parties, the key elements for a valid transfer between parties are the grantor’s intent to convey the property, a properly executed deed, and some form of delivery of the instrument.

Background

Aida Kovaci and Ljulja Dedvukaj were close friends who lived together for a long period. In 2006, Dedvukaj executed and recorded a deed making the two friends co-owners of the house where they were living. In 2011, Kovaci moved into her own condominium and signed a quitclaim deed transferring her interest back to Dedvukaj, though this deed was never recorded. Years later, shortly before her death, Dedvukaj entrusted Kovaci with a check for $143,466.61, which Kovaci was supposed to deposit and gradually return to Dedvukaj. After Dedvukaj’s passing, disputes arose regarding both the effectiveness of the 2011 property transfer and the handling of the entrusted funds.

Rule and Court’s Conclusion

The Court of Appeals affirmed the probate court’s decisions on the issues of property ownership and conversion.

First, with respect to property ownership, the court upheld that a deed takes effect upon delivery and is valid between parties even if not recorded. The touchstone of the analysis, the court thought, was that delivery shows the grantor’s intent to make the instrument effective. Where there is physical delivery of that instrument, there is a rebuttable presumption that the grantor intended to pass title.

Kovaci argued that she could rebut this presumption because the parties’ execution of the deed did not comply with normal formalities. One such example was that the parties did not record the instrument. The court disagreed because Kovaci physically delivered the 2011 quitclaim deed to Dedvukaj, which evidenced her intent to transfer title. Thus, Kovaci effectively transferred her interest back to Dedvukaj even though she did not record it.

Secondly, as to conversion of funds, the court found Kovaci liable for converting $107,466.61 of Dedvukaj’s funds, including $93,466.61 from a check and $14,000 in cash set aside for funeral expenses. The court awarded treble damages under MCL 600.2919a, emphasizing the serious nature of the conversion.

Significance of the Case

This case contains several important lessons:

1. Validity of Deeds: Recording a deed does not determine its validity between the parties involved. A deed takes effect upon delivery and is valid between the grantor and grantee regardless of whether it is recorded. The key elements for a valid transfer are the grantor's intent to convey the property, a properly executed deed, and delivery of the deed to the grantee.
2. Importance of Recording: While not necessary for validity between parties, recording a deed can be crucial when dealing with third parties who may claim an ownership interest in the property. Recording provides constructive notice to the world of the grantee's interest and helps establish priority against subsequent purchasers or lienholders.
3. Avoiding Conversion: Individuals entrusted with others’ funds must exercise extreme caution and maintain clear records of transactions. The possibility of treble damages for conversion serves as a strong deterrent against misappropriation of funds and emphasizes the need for careful handling of entrusted money.

Need help or advice regarding a real estate transaction or estate administration? Contact our experienced real estate and estate administration attorneys. We are here to help!

Disclaimer:

This case summary is based on an unpublished opinion. Unpublished opinions are not binding precedent and are generally not cited as authority in Michigan courts. However, they can provide insight into how courts might approach similar issues.

This publication is for general information only. The information contained is not intended as formal legal advice. If you have any questions or need assistance, please contact your attorney at Curtis, Curtis & Brelinski, P.C.

Click here for the Kovaci v. Estate of Dedvukaj appellate opinion.

Article by: Ethan J. Loch