Chapter 4: Deeds
The habendum clause, included after the granting clause in many deeds, begins
"to have and to hold" and describes the legal rights being conveyed, for example, a fee simple estate or a life estate.
Carson's house had a sale price of $157,000. Because this amount is an even $500, no rounding is required, so the calculation would be as follows:
$157,000 (sales price) / $500 = $314 (excise tax owed)
If the sales price for Janet's home was $231,600, you would round that up to
$232,000 / $232,000 (rounded sales price) / $500 = $464 (excise tax owed)
Which of the following deeds is most preferential from the point of view of the grantor?
A grantor or seller wishes to give a deed that has absolutely no warranties in it, so the seller is subject to the least liability. That would be the quitclaim deed. The grantee, on the other hand, would prefer a general warranty deed.
Trustee's Deed
Across the US, a deed of trust is often used to pledge property as collateral to secure a mortgage loan. North Carolina has multiple forms of trustee's deeds. In some cases, the trustee may be holding another person's property in trust. The trust instrument dictates the authority the trustee has concerning the real property, such as whether he may sell it or otherwise transfer title, such as following a foreclosure.
special purpose deeds
At times specific situations occur that require specialized deeds, such as a court proceeding.
for proper execution a deed must have a competent grantor. To be considered competent, the grantor must:
Be of sound mind for the purposes of entering into a contract. Have reached the age of majority (18 in North Carolina).
A claim, encumbrance, or defect that could make the title to real property unmarketable
Cloud on the title
For a deed to be valid in most states, it must be in writing and contain these elements:
Competent grantor's signature, identifiable grantee, words of conveyance, description of property, consideration, acknowledgment, delivery, and acceptance.
Laws related to the recording of deeds are covered in the
Conner Act
A general warranty deed gives the grantee the least possible protection.
False
Michael, the grantor, is giving a deed to grantee Anita. For Michael's deed to be valid, it must include Anita's signature.
False
Deeds without warranties cannot transfer title to real property.
False - Deeds without warranties, also called nonwarranty deeds, can also transfer title to real property, but with them, the grantor makes no promises regarding title, nor does the grantor guarantee that he even has the right to convey title.
With special warranty deed, the grantor guarantees only the following covenants:
Grantor guarantees he did not create any encumbrances. Grantor promises to defend title against anyone making a claim under his ownership.
The following list includes the essential elements required for a legally valid deed in most states:
Named partiesA competent grantor's signatureAn identifiable grantee Words of conveyance (granting clause) that indicate the grantor intends to convey title to the land A legal property description of the property being conveyed adequate enough to distinguish it from all other parcels of land In writing (required under the Statute of Frauds G.S. §22-2) Consideration (something of value, such as money, goods, services, or promises, given to induce another person to enter into a contract) Legal delivery and acceptance
Karen signed a deed granting her property to her son, Albert, using a property description from an old deed with an inaccurate description. Is this a valid deed?
No
On his deathbed, Norman signs a deed granting his property to his girlfriend Tiffany, who is hiking in the Himalayan Mountains. The deed has all of the elements of a valid deed. Norman dies before Tiffany can be contacted. Does the deed convey title to Tiffany?
No - The deed must be delivered to the grantee, who must then accept it while the grantor is alive, or it is not legally enforceable.
To be effective, a deed must be:
Properly delivered. Accepted by the grantee.
You will need to perform the following two steps to calculate the excise tax:
Round up the sales price to the next $500 Divide the sales price by $500 to calculate the excise tax owed
A deed by which the grantor covenants or guarantees the title from the time the grantor received it until it is conveyed to the grantee
Special Warranty Deed
A law requiring that certain instruments be in writing to be enforceable
Statute of Frauds
Covenant of Quiet Enjoyment
The grantee can possess the land without claims of title from others.
Covenant of Seizin
The grantor owns fee simple title to the estate and has the right to convey it. Also spelled seizen and seisin.
Covenant of Warranty Forever
The grantor will defend the grantee's interest against all lawful claims of title.
The grantee is not required to sign the deed.
True
competent grantor's signature (and the grantor's spouse, if married or anyone else who has a legal ownership interest in the property) is vital for a valid deed to transfer title. This is commonly called the signing requirement, which is found in GS §22-2, the Statute of Frauds
True
3 Special Purpose Deeds we look at
Trustee's Deed Sheriff's deed Deed of gift
A clause in a deed that states the grantor intends to convey title to the land.
Words of conveyance
correction deed
also called a deed of confirmation, could be used to correct an error in a previous deed, such as a misspelled name or an error in the property description. Another example is when a title examiner uses a correction deed to correct a minor defect, such as may be found in a legal description, in a previous conveyance.
Deeds without warranties, also called non-warranty deeds
can also transfer title to real property, but with them, the grantor makes no promises regarding title, nor does the grantor guarantee that he even has the right to convey title. Two types of deeds that do not include warranties are: Quitclaim deeds Bargain and sale deeds
A warranty deed carries
certain guarantees related to title and the grantor's right to convey title. Warranties may be very broad or very limited. When a warranty is breached, the grantee has the right to sue the grantor for compensation. The guarantees that go with a deed differ depending on the warranty deed used, which can be either of the following types: General warranty deed Special warranty deed
For example, a common use of a quitclaim deed is to
correct an error or to acknowledge a name change. A quitclaim deed may also be used to convey an easement.
The _____ is the most important document in a typical real estate transaction—it is an instrument that conveys ownership in real property. _____ is the actual lawful ownership of real property.
deed / title
Sometimes situations arise where a deed is transferred but there is no or very little consideration. This is referred to as a
deed of gift
A sheriff's deed is used in sheriff's sale at _____ to satisfy a judgment to recover a debt
foreclosure
Warranty deeds include ____ warranty deeds and ____ warranty deeds
general / special
Which deed guarantees title against all encumbrances occurring during any previous ownership, usually with the phrase "convey and warrant forever"?
general warranty deed - A general warranty deed gives the grantee the greatest possible protection.
The person to whom the interest is granted is known as the
grantee
The person wishing to grant or convey an interest in real property is known as the
grantor
bargain and sale deed
implies only that the grantor owns the property and has a right to convey it, but there are no warranties that go with it. Bargain and sale deeds are very similar to quitclaim deeds and are used in some states.
A deed is the
instrument that conveys all or part of the grantor's interest, if any, in real property. It is the most common way to convey title, serving as evidence of title. There are also special terms used for the parties involved in the conveyance of title.
An identifiable grantee
is the person to whom the interest in real property is to be conveyed, identified in such a way so as to reasonably separate this person from all others in the world. This would include getting proper and complete full names for the grantee(s), as well as any generational designations (e.g., Jr., Sr.). The names sometimes include the marital status
sheriff's deed
is used in sheriff's sale at foreclosure. The purpose of a sheriff's sale at foreclosure is typically to satisfy a judgment to recover a debt. A sheriff's deed is a type of involuntary alienation. Since such deeds often result from some sort of court order, they may also be referred to as judicial deeds.
Words of conveyance, also called ___________ constitute a clause in the deed that states the grantor intends to convey title to the land.
operative words of conveyance / True
Non-warranty deeds include _____ deeds, _____ deeds, and _______ deeds.
quitclaim / bargain and sale / fiduciary
In North Carolina, when real estate is transferred to a new owner, an excise tax, also referred to as a
real estate transfer tax
North Carolina Excise Tax was formerly called
revenue stamps or deed transfer tax
A recital identifies
the details of how and when the grantor(s) took title to the property. For example: "Being the same premises conveyed to the grantors herein by deed of ACME Construction granted June 6, 1979 ..." A recital is traditionally included in a deed, though not required to make the deed valid.
Special warranty deeds are deeds in which
the grantor warrants the title only against defects arising during the time that he owned the property, and not against defects arising before that time. They are also called limited warranty deeds.
Josie has agreed to accept a purchase-money mortgage (seller financing) from seller Melanie. The agreed sales price of Melanie's property is $145,420. Josie is paying $15,000 cash at the closing. The remaining $130,420 will be the amount of the seller-financed loan, which Josie will pay over the next 15 years. Josie signs a promissory note to Melanie for the loan and executes a purchase money deed of trust as security on the loan. How much is the excise tax owed?
$291 / The excise tax is calculated on the total sale price and the loan is considered part of the consideration, meaning it is subject to the excise tax along with the cash down payment. The calculations is: $15,000 (cash) + $130,420 (seller financing) = $145,420; round up the $145,420 sales price to $145,500; $145,500 (rounded sales price) / $500 = $291 (excise tax owed)
Cabe is buying Dan's property for $200,400 and assuming Dan's existing mortgage loan, which has an outstanding principal balance of $127,000. Cabe is paying the remainder in cash. What is the excise tax owed?
$401
According to G.S. § 105 Article 8E, the excise tax rate is $1.00 on each _______ , or fraction thereof, of the sale price of the property. For example, if a home sold for $200,000, the excise tax would be ________
$500 / $400.
Fred and Ida want to give their beach house to their daughter, and to protect her interests, they want to transfer the property via a deed. Since the property is a gift, it's not necessary to include any consideration in the deed.
False - For the deed to be valid, consideration must be included in the deed, even if it's only $1 and love and affection.
In her deed, Brandy has included a statement after the words of conveyance that includes "to have and to hold." This statement is called the granting clause.
False - This statement is the habendum clause, not the granting clause. It describes the type of estate granted, for example, fee simple or life estate, and follows the granting clause, or words of conveyance.
Through a ______________ warranty deed, the grantor warrants title against all defects that may have arisen before or during the grantor's ownership.
General
A deed in which the grantor warrants the title against any and all defects that might have arisen before or during his or her period of ownership
General Warranty Deed
The types of deeds that are most commonly used in North Carolina and many other states include:
General warranty deeds Special warranty deeds Quitclaim deeds (non-warranty deeds)
Words of Conveyance is the ____ clause
Granting Clause
In North Carolina, the _______________ requires that real estate contract be in writing to be enforceable.
Statute of Frauds / For a deed to be valid in most states, including North Carolina, it must be in writing and contain necessary information on its face. This is required under the Statute of Frauds.
Covenant Against Encumbrances
The property is free encumbrances, such as attached liens or easements, that are not already recited as exceptions in the deed and that would affect conveyance of the title.
___________ registration could solve chain of title problems since all things must be recorded with a Torrens registrar to be valid, but this system is rarely used due to cost.
Torrens System
A common use of special warranty deeds in North Carolina is by banks that are conveying a foreclosed property to a buyer.
True
A general warranty deed gives the grantee the greatest possible protection
True
A sheriff's deed is not only a special purpose deed, but it is also considered a type of fiduciary deed. Fiduciary deeds are executed by a trustee, executor, or other fiduciary, conveying property that the fiduciary does not own but is authorized to manage.
True
Acknowledgment is related to the recording of an instrument. While it is not required that a deed be acknowledged to be valid, only a properly acknowledged deed can be recorded.
True
An example of when a quitclaim deed may be used is to release ownership rights in a divorce.
True
Delivery and acceptance of a valid deed during the grantor's life will transfer the title from the grantor to the grantee. For example, the seller signs the deed and hands it to the buyer at closing. The seller delivered the deed; the buyer accepted it.
True
For a deed to be valid in most states, including North Carolina, it must be in writing and contain necessary information on its face. This is required under the Statute of Frauds G.S. §22-2.
True
General warranty deeds are commonly used for property transfers.
True
In North Carolina, a deed of gift is void if it is not recorded within two years from the time the deed of gift is made.
True
It is a fundamental principle that, for a deed to be valid, it must contain an accurate description. Because a deed is an instrument that conveys ownership of real property from the grantor to the grantee, it requires an accurate legal description that provides an exact explanation of what the grantee is receiving from the grantor.
True
Normally, the seller pays the excise tax.
True
Seven counties in North Carolina are authorized to charge a local transfer tax of up to 1% of the sale price of a property when it is sold. This is an additional tax over and above the state excise tax. These taxes must be approved by each county, which includes Dare, Camden, Chowan, Currituck, Pasquotank, Perquimans, and Washington counties.
True
The grantor's name should be the same as the name on the previous deed as the grantee. If the name has changed, that should be noted (for example, "formerly known as...").
True
The wording of the deed must be such that it communicates a definite and clear intent by the grantor to part with the subject land. The words "give," "grant," "bargain," "sell," and "convey" leave no doubt as to the intent of the grantor.
True
Joe wants to sell his rectangular lot. The legal description in the deed describes only three sides; it does not meet back at the point of beginning. The person typing the deed missed the fourth side. Before he can sell the lot, Joe needs a quitclaim deed.
True - A quitclaim deed or deed of confirmation can correct the mistake in the legal description on the previous deed.
Bobby Sue just transferred her North Carolina home to new owner Billy Joe. This means that an excise tax is levied on the property based on the property value.
True - In North Carolina, when real estate is transferred to a new owner, an excise tax, also referred to as a real estate transfer tax is levied on the property based on the property value.
Grandpa Fred has owned a cottage near the beach for many years that he would like to pass on to his granddaughter, Amy. Grandpa Fred executed and delivered a valid deed to Amy on her 21st birthday, September 23, 2016, but Amy did not record the deed until November 15, 2018. By that time, the deed had become void and ownership reverted to Grandpa Fred. Fred has full ownership and can transfer his property to someone else, if he so chooses. He could also give it to Amy again, but he would have to execute a new deed.
True - This is true, since In North Carolina a deed of gift is void if it is not recorded within two years from the time the deed of gift is made.
All deeds convey title equally well. The differences among these various types of deeds are only in the promises, if any, that the grantor is willing to make to the grantee. Such promises in a deed are known as
True / covenants or warranties
General warranty deeds are deeds in which
a grantor warrants title against all defects that may have arisen before or during the grantor's ownership (also called standard warranty deeds, full covenants and warranty deeds, or warranty deeds
An ________ occurs when a party signs a document before an authorized official stating it was signed voluntarily. In the case of a deed, the grantor acknowledges before a notary public that the act of selling the land is an act of free will.
acknowledgement
A quitclaim deed
conveys any interest in real property the grantor has at the time the deed is executed. A quitclaim deed makes no warranties whatsoever regarding the title, if any, held by the grantor. It conveys whatever right, title, or interest the grantor holds in the property without representation that there is any interest at all.
Mike is selling property to Darlene. Mike is the ___________ and Darlene is the ___________
grantor / grantee
