Chapter 3: Transfer of Real Property

Homeowner's coverage

A homeowner's coverage policy provides added protection in transactions involving residential property with up to four units. It covers most of the same items as an extended coverage policy, but is used to protect the buyer.

Lis pendens

A lis pendens is recorded to provide constructive notice that a lawsuit has been filed that may affect title to specified property.

Mortgagee's policy

A mortgagee's policy provides title insurance coverage to protect the lender's security interest.

Actual notice

A person has actual notice of a fact if she is actually aware of it, whether by direct observation or some other source of information.

Standard coverage

A standard coverage policy offers protection against problems of record that were not discovered in the title search. It also protects against hidden problems such as forged signatures, fraud, incompetency, and improper delivery.

Devise

A transfer of real property by will is called a devise. A testator devises real property to devisees (receives property).

Open and Notorious Possession

Adverse possession must be open and notorious, not hidden, to put the true owner on notice that someone else is using the property.

After-Aquired Title

After-acquired title is an interest in the property that the grantor acquires after executing the deed. example: conveying title in land that is to be inherited. After father dies, title conveys. (Special Warranty)

Will

An owner uses a will to transfer property after her death. -in writing -signed by the testator in the presence of at least two witnesses.

Owner's policy

An owner's policy provides title insurance coverage for the buyer, the new owner of the property.

Avulsion

Avulsion occurs when flowing water or wave action violently tears away land and deposits it elsewhere, or when a sudden change in a watercourse exposes land. Unlike accretion and reliction, avulsion does not necessarily result in involuntary alienation of the land that has been moved or exposed.

Title report

Based on its title search, the title company issues a title report, listing the defects and encumbrances of record. These will be excluded from coverage when the policy is issued.

Condemnation

Eminent domain is the government's power to take private property for a public use. Condemnation is the legal procedure used to force an unwilling property owner to sell. The government must pay just compensation to the owner.

escheat

If a person dies intestate and the probate court can't locate any heirs, then the intestate person's property passes to the state under the law of escheat. The state may also take ownership of abandoned property through escheat.

Hostile Possession

Possession is hostile to the owner's interest if the adverse possessor is acting as if he owns the property. Someone who is in possession of property with the permission of the true owner cannot gain title by adverse possession.

Recital of Consideration

The purpose is to indicate that the property wasn't a gift from the grantor to the grantee. If the property were a gift, the grantor's creditors might still be able to assert their claims against it.

Title search

Using ownership records maintained by the county auditor, the validity of a seller's title can be established by tracing the chain of title back through the previous owners.

Voluntary Dedication

Voluntary dedication is a gift of private property to the public.

Constructive notice

When a person has constructive notice of a fact, he is legally held to know it, even if he does not have actual notice. Recording a deed provides constructive notice of the interest conveyed. Possession of property provides constructive notice of the possessor's interest.

Statutory Dedication

When applying for subdivision approval, a developer is often required to dedicate land within the subdivision to the public for streets and utility easements.

Intestate succession

When someone dies without a valid will, her property passes to her heirs according to rules set forth in a state statute.

Accretion

When waterborne silt is gradually deposited on the shore, it's called accretion. The landowner acquires title to the newly deposited soil.

Power of Attorney

document used to appoint attorney in fact

Bill of Sale

document used to transfer title to personal property from a seller to a buyer.

Eclusions and Reservations Clause

lists any encumbrances-- easements, private restrictions, or liens that will burden the grantee's title.

Clouds on Title

-technical flaw in an earlier deed, such as a typographical error in the property description -unreleased lien, which indicates that there may be an unresolved claim against the property. example: executing title under maiden name after married creates cloud

Deed Essentials

1)In Writing 2)Signed by Grantor 3)Identifies Parties 4)Competent Grantor (18 years old) 5)Living Grantee 6)Words of Conveyance 7)Property Description (adequate to surveyor) -Can be signed by attorney in fact

Quitclaim Deed

A quitclaim deed offers no warranties, conveys no after-acquired title, and creates no liability for the grantor. It is typically used to clear away clouds on title.

Extended coverage

An extended coverage policy offers protection against the same types of problems that standard coverage does. In addition, it protects against problems that could be discovered in a property inspection.

Recorded documents

Deeds, mortgages, deeds of trust, land contracts, and documents creating or removing encumbrances should always be recorded. Purchase and sale agreements are not recorded.

Recording procedures

Documents affecting title to real property are recorded in the county where the property is located. Recording procedures are established by state law.

Foreclosure

In a foreclosure, a creditor with a lien against property asks the court to have the property sold. The lien will be paid off out of the foreclosure sale proceeds.

Suit for partition

In a partition suit, the court divides property owned by two or more people among the co-owners. If the property itself can't be divided, then it will be sold and the sale proceeds will be divided up.

Quiet title action

In a quiet title action, the court resolves claims against a property to clear away clouds and make the owner's title marketable.

Title insurance policy

In a title insurance policy, the title company agrees to reimburse the policyholder for losses resulting from title problems covered by the policy.

General Warranty Deed/Simple Warranty deed

Most common, grantor gives the grantee guarantees (warranties) about the status of the title to the property. Because its covenants are not limited to the grantor's period of ownership, the general warranty deed provides greater protection to the grantee than any other type of deed. It also creates the greatest liability for the grantor.

Government action

Neither standard nor extended coverage title insurance covers problems resulting from government action, such as zoning changes.

Reliction

When a body of water recedes slowly, exposing land that's been underwater, it's called reliction. The adjoining landowner acquires title to the newly exposed land.

Conveyance

acknowledgment (signing in front of witness), delivery, and acceptance.

Adverse Possession

acquires title after ten years of possession that has been actual, open and notorious, hostile, exclusive, and continuous.

Date of Execution

deed can be valid without date

Deeds

document a private landowner uses to transfer real property to someone else. most common method of voluntary alienation real property, not personal

Alienation

general term that refers to all of the different methods by which real property can be transferred from one person to another. Whether accomplished by means of a deed, a will, foreclosure, or in any other way, a transfer of ownership is a form of alienation. Voluntary or involuntary

Covenant of Warranty

grantor promises to defend the grantee's title against any claims superior to the grantee's that exist at the time of conveyance.

Actual Possession

possession and use of the property in a manner appropriate for that type of property.

Covenant of Quiet Enjoyment

promise that the grantee's possession of the property will not be disturbed by the lawful claims of any third parties.

Grantor/Grantee

property owner/person receiving property

Special Warranty Deed

the covenants cover only problems that arose while the grantor owned the property. example: a special warranty deed is likely to be used if the grantor is a fiduciary (such as an executor of an estate) who is holding the land only temporarily.

Covenant of Seisin

the grantor promises that she actually owns the interest that the deed is conveying to the grantee.

Covenant of Right to Convey

the grantor promises that she has the right to convey the interest in question to the grantee.

Covenant Against Encumbrances

the grantor promises that there are no easements, liens, or other encumbrances against the title that have not been disclosed to the grantee.

Probate

the legal procedure for establishing the validity of a will and distributing property according to the terms of the will.

Habendum Clause

to have and to hold, if a warranty deed doesn't have a habendum clause, it is presumed to convey a fee simple absolute. So if the grantor means to convey anything less than a fee simple absolute, it's important to include a habendum clause making that clear.