December Real Estate Update | Rae Lee Davis v. J. Garnett Davis, Jr.

On December 5, 2019, the Supreme Court of Virginia issued an opinion invalidating three gift deeds executed and delivered in 2013. The decision is significant in that evidence outside of the recorded documents – and, presumptively, outside of the review of any title examiner – was relied upon by the Court in reaching its decision.

In Rae Lee Davis v. J. Garnett Davis, Jr., Dickey Davis executed a durable power of attorney granting his mother, Agnes, the power to “sell and convey” his real property and to otherwise “execute and perform all and every act or acts” that Dickey could do if acting personally. In October 2013, following the deterioration of his mental and physical condition, Dickey’s physicians notified Agnes of the risk of Dickey’s passing. Within a few days, Agnes made various gifts of Dickey’s personal property to herself and executed three deeds conveying real property valued in excess of $2 million to Dickey’s siblings. The stated purpose of the transfers was to place the properties into “safer hands” and away from Dickey’s spouse, Rae. Dickey passed away in November 2013.

In 2016, litigation was filed challenging the transfers and in November 2017 the circuit court upheld the validity of the deeds. On appeal, the Supreme Court of Virginia first analyzed the legal doublet of “sell and convey” and held that the term did not permit gifting. The term required both a selling and a conveyance such that the attorney-in-fact was authorized to cause transfers only for “adequate consideration.” As there was no consideration, much less adequate consideration, the reliance on the “sell and convey” power was ineffective.

Agnes next asserted that Va. Code § 64.2-1622(H) allows an attorney-in-fact to make gifts of real property in accordance with the principal’s personal history of making gifts. At trial, there was no evidence of any gifts of real estate during Dickey’s lifetime. Absent such evidence, the Supreme Court held that the three 2013 deeds of gift were invalid.

The Supreme Court’s decision raises more questions than it settles. With the vast majority of deeds in the Commonwealth being recorded without complete documentation as to either the adequacy of the consideration or the principal’s lifetime history of making gifts, one should exercise due care in determining the adequacy of deeds executed by attorneys-in-fact.

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