Ch 9-Deeds and Titles

Actual notice

-AKA Actual Knowledge -includes what someone personally saw, heard, read, or observed -may be provided to an individual, but it's not practical to expect the general public to have actual notice -failing to record a document does NOT impact the validity of the document between parties to the document and other people who have actual notice of its existence

Constructive Notice

-AKA legal notice -law holds that everyone has constructive notice of recorded documents -even if someone didn't know about a particular recorded document, he or she could have found it by searching the public record -the law expects a buyer or lender to search the public record for his or her own protection

Deed of Trust

-Transfers title to real property as security for payment of a note -creates a voluntary lien on a real property to secure repayment of a debt (similar to a mortgage) -Requires the trustor, who owes the money, to transfer title to a trustee as security for the debt owed to beneficiary, the lender -Requires the trustee to return the title back to the borrower via a Deed once the borrower has repaid the loan secured by the Deed of Trust -New York is considered a lien theory state and does not use Deeds of Trust

Abstract of Title

-a complete historical summary of title to a piece of property -lists all documents in the public record that have affected title to the property -shows all grants and conveyances from the chain of title -should show every lien, easement, restriction, lawsuit, mortgage, and other encumbrances that have ever affected the property, even if the encumbrance has been removed or satisfied -lists the public records that were searched, as well as the public records that were NOT searched -does NOT reveal encroachments on the property, which would need to be documented through a survey of the property, not through public records -does NOT ensure validity of the title

Quitclaim Deed

-convert whatever right, title, or interest the grantor holds in the property or parcel of land WITHOUT REPRESENTATION THAT THERE IS ANY INTEREST at all -make no warranties regarding the title, if any, held by the grantor -usually involve just a partial interest in the property -may be used to clear up any claims, encumbrances, or defects that make the title to real property unmarketable -may be used to remedy clouds on a title or title problems -typically may be used to convey an easement

Requirements for a Valid Deed

-names of the parties -consideration -granting clause -legal description of the property -execution

A General Warranty Deed normally contains these basic covenants:

1. Covenant of seizen 2. Right to convey 3. Quiet Enjoyment 4. Further Assurance 5. Against encumbrances 6. Warranty Forever

Systems of Legal Description

1. Metes and Bounds 2. The Monument System 3. Lot and block system 4. The Government Survey System

Recording a Document

1. Provides notice of interest to public 2. Allows owner to defend their estate 3. Protects owners against secret conveyances and encumbrances 4. Is required for any legal document that affects title to RE (deeds, easements, restrictive covenants, liens, etc) 5. Is required for certain documents to be legal (mechanics liens, etc) 6. Requires acknowledgement of an authorized official (usually a notary public) 7. Does NOT make an invalid document valid

Acre

43,560 sq feet

Mile

5,280 linear feet

Cubic yards

=cubic feet divided by 27

Chain of title

A clear and unbroken chronological record of the ownership of a specific piece of property, linking each previous owner to the one before her through deeds. Any gap creates uncertainty, called a cloud on a title.

Inquiry Notice

A person has inquiry notice when there's an indication of a claim or other situation that would alert a REASONABLE PERSON TO FURTHER INQUIRE about the title -someone who does not find a claim against property through the failure to look further may still be held to have inquiry notice of a claim -when someone is in possession of land, a buyer is held to have inquiry notice of the possessor's claim even if the buyer never visited the land

To find area of a trapezoid shaped lot:

Add the lengths of the two parallel sides, divide by 2, then multiply the depth of the lot

Full Covenant and Warranty Deed

Aka General Warranty Deed 1. Strongest and broadest type of Title Guarantee 2. Legally bind the grantor to certain legal promises or guarantees (aka covenants or warrantees) regarding status of the title 3. Guarantees against defects occurring during ANY PREVIOUS OWNERSHIP 4. Give the grantee the MOST PROTECTION

Grant Deed

Aka Special Warranty Deed AKA Limited Warranty Deed A Deed in which the grantor warrants title only against defect, such as liens, clouds on the title, or other encumbrances arising from the time he or she owned the land BUT NOT BEFORE THAT TIME

Government Survey System

Aka the "Rectangular Survey System;" isn't used in NY.

Deed

An instrument (written document) that conveys a grantor's property to someone else, the grantee-aka conveyance

Mortgage

An instrument that creates a voluntary lien on real property to secure repayment of a debt. The Mortgage needs the legal description of the property because the property is the collateral for the loan that they have made.

Equitable Title

An interest in property created on the execution of a valid sales contract, whereby actual title will be transferred by deed at a future date, such as at the closing; includes certain rights and privileges of title

To find the area of odd shaped lots:

Break the outline into multiple regular shapes, find the area of each, and add them together

Monument system

Can be used in place of metes and bounds; often used to describe multi-acre tracts of land. The description is drawn from permanent objects on the land, such as a well or large tree.

What is necessary when recording Deeds

Deeds are not required to be recorded to be valid, but does ensure that its existence is clear to third parities in the public record. -Acknowledgement: signature of a notary public or other authorized party -Certificate of the address of grantee -Evidence of RE Transfer Tax *Recording an invalid document does NOT make it valid

Title Insurance

Indemnified the property owner against losses resulting from undiscovered title defects and encumbrances on the property. The legal description defines exactly what is insured.

Deed

Legal description is required, as it provides an exact explanation of what the grantee is receiving from the grantor.

A suit to quiet title

May be required to close any missing links and remove the cloud on the title

Voluntary Alienation

Most common way to transfer ownership of land; may be accomplished through sale, gift, dedication, or grant

Conveying Title

Once a valid deed has been delivered and accepted: -the title transfers from the grantor to the grantee -the deed's job is done; it is simply evidence that the transfer of Title took place -Title cannot be re-conveyed by destroying the deed or returning it to the grantor. The grantee would have to execute a new deed transferring title back to the original grantor -A deed cannot be reused by reassigning, or transferring to the next owner. Each transaction requires a NEW deed

Bargain and Sale Deed

One in which the grantor: -implies that he or she has an interest (substantial title and possession) in the property being conveyed -makes NO WARRANTIES to the grantee regarding the title -may be with or without covenants or Warranty

Title Insurance

Protects BOTH the buyer and the lender -does not cure defects, but insures against losses due to title defects OTHER THAN THOSE SPECIFICALLY EXCLUDED -Requires a one-time premium to be paid at settlement -Requires the title company to go to court if necessary and defend its policyholder against any claim against the ownership of the land -generally pays out claims based on the actual decrease in value caused to the property -rarely pays out the full face amount of the policy, or the full value of the property, is rarely paid out unless a serious defect causes the owner to lose title to the property -Usually gives the company issuing the policy the right to pursue third parties to regain any claim money paid, a process known as subrogation -is usually paid for by the party who has the greatest liability, based on the guarantees made in the deed

Legal Descriptions

Provides the ability to identify and distinguish that property from any and all other parcels of land. Required on these three documents: deed, mortgage, and title insurance. *if there is a discrepancy with the legal description among these documents, the title company should do the research to resolve it.

Lot and Block System

Simplest System; used for platted, or subdivided property. Contained in a Plat Map, recorded in the public records of the county in which the land is located.

Finding area

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Title

The actual lawful ownership of real property; a reference to holding the legal bundle of rights conveyed

Metes and Bounds

The oldest system used, most complex. Usually starts from an identifiable permanent reference point, and from there, finds the first corner of the property, the point of the beginning. The description continues by indicating a compass direction and distance to define the boundaries of the lot. ***Commonly used by surveyors in New York***

Front feet ("Frontage")

The portion of the lot that faces the street. It's always the first number when the dimensions of the lot are provided.

Involuntary Alienation

Transfer of title in an interest in real property against the will of the owner, or without action by the owner, occurring through operation of law, natural processes, or adverse possession. Accomplished by accession, foreclosure, eminent domain, or Adverse possession

Devise

When a person dies WITH A WILL (testate), the property is transferred to his heirs as indicated in the will. The executor designated in the will is responsible for carrying out the transfer of the property.

Descent

When a person dies WITHOUT A WILL (intestate) his property automatically descends to his heirs or next of kin as provided for by state law. An administrator appointed by the court will handle the affairs of the estate. Process AKA intestate succession.

Notice

When people have conflicting claims, their rights and liabilities sometimes depend what one person knew or SHOULD HAVE known