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Dear Bill:
This letter is to review the recent transaction
between Lowry & Wells Investments and the Aids
Association for Lutherans (“AAL”). AAL was the holder
of a Promissory Note Secured by Deed of Trust on the
Fitch Street Property owned by Lowry & Wells
Investments (“L & W”). In late 1993 a settlement was
negotiated between AAL and L & W whereby L & W would
convey the property to AAL, together with all leases
and tangible personal property, in return for which AAL
would agree to accept such conveyance as a full
settlement of the then outstanding indebtedness.
Through joint instructions to escrow, the parties
agreed that the closing would occur subsequent to
December 31, 1993, and in fact the Deed conveying title
to the property was recorded May 27, 1994.
(Mr. Holt is identified in a document stipulated by the parties
as “the predecessor accountant”.)
Petitioners quote sections 1055 and 1056 of the California
Civil Code (West 1982) in support of their position that title to
the Fitch Property passed on December 9, 1993, when the partners
executed the warranty deed:
SEC. 1055. Presumption as to date of delivery
DATE. A grant duly executed is presumed to have been
delivered at its date.
SEC. 1056. Delivery necessarily absolute
DELIVERY TO GRANTEE IS NECESSARILY ABSOLUTE. A
grant cannot be delivered to the grantee conditionally.
Delivery to him, or to his agent as such, is
necessarily absolute, and the instrument takes effect
thereupon, discharged of any condition on which the
delivery was made.
In quoting the above sections, petitioners overlooked Cal.
Civ. Code sec. 1057 (West 1982), which provides:
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