Conveyances and Deeds

4. Deed: identifying the parties

Identify the Parties A deed must properly identify (name) the grantor and grantee. In a real property sales transaction, the seller would be the grantor and the purchaser would be the grantee. If there are a number of grantors or grantees, all must be named. Legal phrases et al (meaning "and others") or et ux (meaning "and wife") should not be used as identification.

No probate needed in death

If a person owns property as a joint tenant with a right of survivorship, his interest will automatically pass to any surviving co-owners named in the deed, upon his death. If a couple owns property as tenants by the entirety, upon the death of one the estate passes to the other to be held as a tenant in severalty. If a person has a life estate, upon the death of the person on whose life the estate is based, title will either: revert to the grantor or to the grantor's heirs or devisees, or pass to the remainderman, as specified in the deed. In these instances probate would not be required.

judicial foreclosure

In a judicial foreclosure, upon default, the creditor requests the court to foreclose on the property. In some states, the request may be for strict foreclosure. This foreclosure would terminate the property owner's rights and give the title to the creditor. In most cases, the request is for foreclosure and sale, which terminates the owner's rights and causes the property to be sold by the sheriff to the highest bidder.

6. Competent Grantor

The grantor must be legally competent, that is, alive, mentally competent, and legally authorized to convey title, at the time the deed is delivered. A deed would be voidable (i.e., enforceable but able to be voided), by a grantor who was a minor or who was determined after the fact to be incompetent at the time of delivery of the deed.

Signature

The grantor, or a lawful agent of the grantor acting under written authority, must sign the deed. If there is more than one owner of the property, all must sign as grantors. The signatures need not be witnessed. The deed can be signed by an attorney-in-fact acting on behalf of the grantor if there is a written power of attorney authorizing this, recorded in the county in which the property is located. If the grantor is a corporation, an officer authorized by the board of directors or by vote of the stockholders would sign for the corporation. If the grantor is a trustee representing an unincorporated group, he must have written authority granted by the charter and bylaws of the group to act on its behalf.

Greatest protection to least protection

Warranty Special Warranty Bargain and Sale deed Quitclaim deed

Involuntary Alienation

ownership of estates may be transferred by operation of law.

Elements of Deed required

1. In writing 2. have words of conveyance 3. describe the property 4. identify the parties to the deed 5. Be signed by grantor 6. have a legally competent grantor 7. Be delivered

Titles transferred to/from Government

1. Patent 2. Forfeiture 3. Dedication 4. Eminent Domain

Grantee

A grantee need not be competent or sign a deed. The only requirement of the grantee is that he be either a living person or a legal person (e.g., an existing corporation) capable in law of accepting delivery of the deed. The grantee cannot be a fictitious person created to defraud others; however, a grantee could be an actual person using a fictitious, or assumed, name.

Non judicial foreclosure

A nonjudicial foreclosure is allowed when the mortgage or deed of trust (or trust deed) used to make real property security for a loan has a power of sale provision, giving the lender or a trustee the power to foreclose and sell the property without going to court.

Recording Deeds

An unrecorded deed is valid between the parties, but may be void against bona fide persons who are without notice and record a deed first. State statutes allow documents relating to real estate to be recorded in the county or counties in which the property is located so there is a way to keep track of interests in the property. The recording system enables a person to provide constructive notice of his interest in a particular parcel of real estate and establish the legal priority of his interest. It also helps prevent forgery, as a document transferring rights, such as a deed, must be acknowledged by the person giving the rights, before the document can be recorded. Acknowledgment includes declaring and signing before a notary that the transfer is his voluntary act. A person has notice of a prior claim of right when he has either constructive notice or actual notice. He has constructive notice when he has a means of obtaining knowledge of rights in land. This notice is provided when an owner takes possession or records a deed. A person has actual notice when he has actual knowledge of a fact, such as when he sees a recorded deed or knows a person has an unrecorded deed.

Constructive Notice

Constructive Notice When an owner of land provides the public with a means of obtaining knowledge of his rights in the land, that owner is providing constructive notice of his interest in the land. A person can provide constructive notice in two ways: Take possession of the land. Possession of land by a person other than the grantor gives constructive notice. A grantee who has an unrecorded deed provides constructive notice upon taking possession of the property by: -occupying the property. -renting the property to a tenant who occupies the property. -any other means that would enable an interested person to determine that perhaps the owner of record is not the current owner. Properly record the deed. A better way of protecting one's rights is to record the deed. If an instrument is recorded, a purchaser cannot successfully claim that he did not know about the contents of the recorded document. Recording helps to forestall actions arising from persons with unrecorded interests in the land by giving priority to the person who records first.

Eminent Domain

Eminent domain is the government's right to acquire title to property for public use by paying just and fair compensation to the owner. The two critical elements of eminent domain are public use and fair compensation. The land must be taken for public use, e.g., for streets, highways, airports, public buildings, parks, etc.: A district school board may seek property for a public school through the power of eminent domain. A city can acquire property to widen a road from the owners of abutting property under the exercise of eminent domain. The land can be taken by the government itself or by an authorized private entity, generally a public utility or public service corporation (for instance, a power company, railroad, communication company, or water company).

Habendum clause

Following the granting clause there might be a habendum clause. This clause defines or limits the quality and quantity of the estate being conveyed. It is only needed when the grantor is conveying less than a fee estate. Without a habendum clause, the deed is presumed to convey fee simple title. If the deed were intended to convey a life estate, a habendum clause would be needed. It begins with the words, "to have and to hold." For example, "to John Doe, grantee, to have and to hold, a life estate in..."

Equitable or statutory right of redemption

Generally, a property owner has an equitable right of redemption in foreclosure actions. This is the right to keep the title by paying off the entire debt prior to the date of the foreclosure. In some states, the property owner will also have a statutory right of redemption, allowing him to buy back the property by paying off the entire debt within a specified period after the foreclosure.

Quitclaim Deed and Quiet title action

In order to get marketable title to property, an adverse possessor would have to obtain a quitclaim deed from the ousted owner or take quiet title action to obtain a judicial decree clearing the title to the property. A quitclaim deed passes any interest the signer may have in the property, but does not tie him to any warranty. Quiet title action is a lawsuit to determine and resolve all adverse claims to ownership of the property.

Loss of Land

Just as a person can acquire title to soil by accretion, a person can lose title to soil through erosion. EROSION is the gradual loss of soil due to natural causes, such as currents, tides, winds or changes in temperature. It is the opposite of accretion. * Natural gradual loss of land When the natural loss is not gradual, but a sudden tearing away or removal of land by action of water (e.g., the removal of land when a stream suddenly changes its channel after a flood), the loss is called AVULSION. Because the loss is sudden and perceptible, title to the land is not automatically lost, and the owner can claim the original boundary and reclaim the lost land, if that is possible. * Rapid loss of land by water

NOTICE

Notice 1. Constructive - take possession of land - properly record deed 2. Actual - see recorded deed - Know person has unrecorded deed

New deed vs. reconveyance deed

Once there has been a valid delivery, the act of the grantee in surrendering the property or the deed will not give the title back to the original grantor. To give title back, the grantee must execute a new deed back to the original grantor. A reconveyance deed is used in connection with trust deeds, not title transfers.

Probate

Probate is the process by which a court: collects the deceased's assets. pays the legal claims of his creditors. distributes the remainder of his estate to those entitled to it. Upon the death of a person who is a tenant in severalty or a tenant in common, his interest would be probated, whether he died testate (leaving a will) or intestate (not leaving a will).

Forfeiture

Property may be forfeited to the government if it was used in the commission of a crime.

Deed restrictions

The conveyance may include deed restrictions, restricting the grantee's use of the property. These may be covenants or conditions. They are generally referred to as CC&Rs, or Covenants, Conditions, and Restrictions:

CONVEYANCES: Alienation

The conveyance or transfer of title from one owner to another involves alienation of title by the current owner and acquisition of the title by the new owner. Alienation is the transfer or conveyance of the title to real property to another. Every property owner has a right of alienation, that is, the right to transfer his interest in the property to another. Alienation may be voluntary or involuntary: Voluntary alienation refers to such actions as the sale, gift, or will of property to another. Involuntary alienation refers to transfer of ownership of the estate by operation of law (or court action).

Seizen

The covenant of seizen warrants that the grantor is the owner and possessor of the property and has the interest or estate he purports to convey.

valid date of deed

The deed is valid as of the date it was delivered (when title was intended to pass), whether it is recorded then, later or never.

7. Delivery

The deed will not convey title until it is delivered to the grantee and accepted. Acceptance is presumed if the grantee does not reject the deed. For delivery to be effective the grantor must: -intend delivery. Delivery depends upon the intention of the grantor. -intend the title transfer to be immediate, not in the future. -give up control of the deed by: giving the deed directly to the grantee. -recording the deed. -giving the deed to an escrow agent with instructions to deliver the deed to the grantee or to record the deed after certain conditions are met. A deed may be used only once. Once a deed is delivered, it cannot be used again to convey any interest in the property. It cannot be assigned, transferred or endorsed to another. If after delivery, the grantor and grantee were to decide to cancel the transaction, the grantee would have to prepare a new deed, naming himself as grantor, and sign the deed as the grantor.

Deed forms

There generally are four deed forms available for use: 1. Warranty deed (or general warranty deed) 2. Special warranty deed 3. Bargain and sale deed 4. Quitclaim deed These deed forms differ with regard to the warranties or covenants of title they contain. These warranties relate only to the condition of the title being conveyed. They do not provide assurances as to the condition of the structure or provide for reimbursement if a structural defect is discovered.

Unrecorded deed vs. rights of bona fide purchaser who first records his deed

While an unrecorded deed is valid and binding between the parties to the deed (the grantor and the grantee), it would be void against the rights of a bona fide purchaser who first records his deed. A bona fide purchaser is a purchaser who pays valuable consideration in good faith and has no notice of the existence of another person's claim to the title. A person is without notice if he has no actual knowledge of another's rights to the property and has no reasonable means of obtaining that knowledge. A person has notice of a prior claim of right when he has either constructive notice or actual notice.

"hostile" (in relation to adverse possession)

"Hostile" refers to the fact that the possessor is claiming ownership of land owned by someone else. In doing so, he is rejecting the claim of the true owner.

Adverse possession defeated

A claim of adverse possession would be defeated if during the required number of years: -the adverse use were discontinued even temporarily at any time. -the true owner asserted ownership rights and resumed actual possession. -the true owner took legal action to have the adverse possessor removed. In many states, the adverse possessor must also be in possession under a claim of right or color of title: -A claim of right means the adverse possessor claims ownership of the land. -Color of title means the adverse possessor claims title under a written conveyance of the property or by operation of law from another person claiming title under a written conveyance. For example, a person who occupies the land under an invalid deed, while believing the deed to be valid, would have color of title. -Title generally cannot be acquired by adverse possession when the true owner is: -under legal age. -incompetent or insane. -the government (although the government can take title to private property by adverse possession).

Condition

A condition is a qualification of the estate being granted For Example - Bea Ware willed her property to ABC Church with the condition that it may hold the title as long as the property is used for church purposes. When the church leased the property for commercial retail use, it violated the condition. Because the reverter clause in the condition provided that the church would lose the title, the title would revert to Bea's heirs. Covenants and conditions may not be used for the purpose of illegal discrimination. Any illegal discriminatory covenant or restriction in a real estate document would be null and void, as a matter of public policy.

Covenant

A covenant is a promise by the grantee to either do something or to not do something with regard to the property For Example - Sandy Loam was deeded property with a covenant that provided she had to build a house of at least 2,000 square feet and not build within 10 feet of the lot line. If she builds a smaller house or a house within 10 feet of the lot line, she will need to make changes or tear the house down.

DEEDS

A deed is the formal written instrument by which an owner conveys title to real property during his lifetime. The main purpose of a deed is to provide clear evidence of a change in title or transfer of an interest in real property. Because the deed shows the transfer, it is often called a conveyance. The deed is evidence of title to the property, but not title itself. The term "title" refers to the intangible rights of ownership. There is no document called title that shows ownership of real property. Instead, the deed is evidence that one has rights of ownership. For Example - A deed could be a piece of paper on which is written "I, Mimi Mine, convey to Hubie Nice, the real property described as Lot 12, Block 6, Allen Subdivision, Clark County, Washington. This is my voluntary act, Mimi Mine (signed)." When delivered, the deed is valid. While requirements may differ by state, the following elements are generally required in order for a deed to be valid.

Bargain and Sale Deed

A grantor willing to convey title, but without any warranties of title, may use a bargain and sale deed. This deed simply states the grantor conveys the real property to the grantee. It does not provide any warranties or covenants of title in the grantee or the grantee's successors. Therefore, it will not protect the grantee against title defects.

Patent

A patent is a conveyance of title from the government, or sovereign power, to private owners. After claiming all the land through discovery, occupancy, conquest, or purchase, the government conveyed title to much of it to private owners through instruments called patents. If one were to trace back the record of ownership of a parcel of real estate, the first grant one would find in the chain of title is a patent issued by the government.

patent (Type of conveyance)

A patent is an instrument that conveys title to real property from the state or federal government (a sovereign power) to an individual.

Actual Notice

A person who has actual knowledge of a fact is said to have actual notice. A person has constructive notice of ownership when a deed is recorded and has actual notice when he actually sees the recorded deed. While he has constructive notice when a person is in possession of property, he has actual notice when he knows the person is in possession of the property, or knows of the person's right to possession.

Prescription

A person who merely uses another's property, openly, notoriously and hostilely, for a continuous state-specified number of years cannot claim title by adverse possession, but can claim an easement giving him a permanent, irrevocable right to use that property. Acquisition of an easement through adverse use is called prescription. Therefore, a person driving across another's land for a certain number of years without permission could get a permanent right of way through prescription, but not title by adverse possession.

Special Warranty Deed

A special warranty deed is a limited warranty deed. It limits the covenants by the grantor. In this deed the grantor conveys and specially warrants to the grantee the real property free of encumbrances created or suffered by the grantor except as specifically set forth in the deed. It has the same effect and warranties as the general warranty deed, except that the covenant against encumbrances is limited to those created or suffered by the grantor. If an owner were not certain that the property he was selling was completely unencumbered but he was willing to guarantee the title against defects arising from any action, by, through or under himself, he could offer the buyer a special warranty deed.

Will

A will is an instrument used to dispose of a person's property (the estate) upon death. Since the legal term for a will is a testament, a person who dies leaving a will is called a testator and is said to have died testate. Generally, to be valid, the will must be a witnessed will. This is a will made by a mentally competent person who has reached majority, normally 18 years of age. The will needs to be signed by or for the testator in front of at least two witnesses, who also sign it. The will becomes effective when the testator dies. Prior to death the will is "ambulatory," meaning that it can be changed at any time. Changes to the will are called codicils. Some states recognize what is called a holographic will. This is a will entirely handwritten by the testator, but not witnessed. Some states recognize an oral (nuncupative) will, normally only if it is made while the testator is on his deathbed with witnesses present and is to dispose of personal property of minimal value.

Dedication

Dedication is the gift or donation of property to the public without consideration. This may occur through dedication in public records, a deed or a will. Through statutory dedication, a developer may be required to turn over land in a proposed subdivision to a public use, e.g., streets and public areas, in order to obtain approval for the development. Through common law dedication, a local government may declare property to have been dedicated for public use, due to a property owner allowing the public to use the property for an extended period.

Delivery of deed

Delivery is the final act of the grantor signifying an intention that the deed should currently take effect. Upon valid delivery, title passes. Note, delivery does not mean manually transferring the deed. It means the intention of the grantor to make the deed currently effective to transfer title. Therefore, a deed is presumed delivered if given to the grantee, given to escrow or recorded.

Contract for deed (real estate contract or land sales contract)

Property may also be lost as a result of forfeiture under the terms of a contract for deed. A contract for deed (also called other names throughout the country, including real estate contract or land sales contract) is a contract under which a buyer (vendee) agrees to pay the seller (vendor) for the property over a period of time. If the buyer satisfies his contractual obligation, the seller will give him a deed. Often the contract will include a provision allowing for forfeiture of the vendee's interest if the vendee defaults, so the vendor can reclaim the property without having to resort to foreclosure. Real property may also be alienated as a result of a gift or a sale by means of a deed. This is the most common means of a title transfer.

recording of documents

Recording of documents affecting title to real estate must be performed in the county in which the property is located. The recording system: enables a person to provide constructive notice to the world of the interests in a particular parcel of real estate. helps prevent forgery in recorded documents by requiring acknowledgement by a grantor in front of a notary public. establishes legal priority of interests. Generally, whoever records first and is without notice of a prior claim of right has priority. The date and time stamped establish legal priority for those interests that are recorded first.

Condemnation

The process by which property is taken for public use under eminent domain is condemnation. When an owner of land refuses to sell the land at the price offered under the right of eminent domain, the government may require the owner to sell the land through condemnation proceedings. Just compensation must be paid to the landowner. Therefore, while a landowner generally cannot expect compensation from the government for loss of use of land due to land use restrictions, such as zoning, he may expect compensation for the physical taking of his land through eminent domain. Just compensation can include: compensatory damages in the amount of the fair market value of the property taken, at the time of the taking. severance damages for the loss in value to the portion of the property not taken. consequential damages for loss in value due to surrounding property taken. If the loss in its value or use is too extensive, the owner may sue for inverse condemnation, to require the government to take and pay for the property.

Quitclaim Deed

The quitclaim deed creates the least protection of any deed for the grantee and entails the least liability to the grantor. It passes any interest the signer may have in the property but does not tie him to any warranty. The interest could be fee simple, an easement, a claim of adverse possession, color of title, or any other interest the grantor may have. This deed states that the grantor transfers any interest he might have, although he may have no interest at all, and someone else may have a stronger claim. Therefore, the quitclaim deed might convey no ownership rights at all. It merely releases any claims of the grantor to rights in the property. For this reason, a quitclaim deed is most commonly used to remove a cloud from the title. A cloud on the title is an encumbrance, charge, or claim against the property, which could make it legally impossible for the owner to convey marketable title.

Title

The term "title" refers to the intangible rights of ownership. A deed is not the title, but is a written instrument by which an owner conveys or transfers title to real property during his lifetime. The main purpose of a deed is to provide clear evidence of a change in title or transfer of an interest in real property. It automatically conveys fee title unless it has a habendum clause that defines or limits the quantity or quality of the estate, by specifying the estate the grantee is to "have and to hold."

Warranty Deed

The type of deed generally required of a seller is a warranty deed (or general warranty deed). From the grantee's point of view the general warranty deed is the most desirable type of deed. This is because it provides the greatest protection for the grantee and creates the greatest liability for the grantor. Normally, the warranty deed states or implies the following warranties or covenants: Covenant of seizen. This guarantees the grantor owns and possesses the property, has a fee simple absolute interest, has no conditions restricting the title, and has the right to convey the title. The grantor would be liable for the full price of the property if there were an undisclosed condition, or he had only a life estate. Covenant against encumbrances. This guarantees there are no tax liens, mortgages, assessments or other liens except as stated in the deed. Covenant of warranty. This provides the grantor will defend the title against all persons who lawfully claim the title. Covenant of quiet enjoyment. This warrants that the grantee will not be disturbed by a person with a lien or better claim to the property. Covenant of further assurance. This warrants that the grantor will perform any additional act or provide any document needed to provide the title promised.

Grant deeds

There are a number of other forms of deeds. In some states (such as California) grant deeds are used instead of warranty deeds. Deeds may be referred to by their purpose: A reformation deed (or correction deed) has wording stating that the deed is given to correct a specific error in a previous deed. A gift deed is used to make a gift of real property. The consideration given is good consideration (i.e., love and affection), rather than valuable consideration. A tax deed is used to convey title as a result of tax foreclosure. A sheriff's deed is used to convey title to property sold by the sheriff under a court foreclosure or execution of a judgment. An estoppel deed (or deed in lieu of foreclosure) is given by a delinquent borrower to the lender in order to avoid foreclosure. A mining deed conveys mineral rights or an interest in a mine. A trustee's deed is given by a trustee to the purchaser of property sold at a trustee's sale, resulting from the default on a deed of trust.

Types of Deeds

There are many types of deeds. A general warranty deed provides the greatest protection for a grantee and creates the greatest liability for the grantor. It has a covenant of seizen (that the grantor is the owner and possessor of the property with the right to convey the title), a covenant against encumbrances (that the property has no liens or other encumbrances except as stated in the deed), and a covenant of warranty (that the grantor will defend the title). A special warranty deed limits the warranty against encumbrances to only those defects arising from actions by, through, or under the grantor. A bargain and sale deed conveys title without any warranties or covenants. A quitclaim deed releases any claims of the grantor to rights in the property. While it will convey the grantor's existing interest in the property, it may convey no ownership rights at all. It is generally used to convey partial interests and to clear clouds on the title by releasing a claim of one of the parties claiming an interest. A deed may have reservations and exceptions. A reservation allows the grantor to keep rights (such as mineral rights) in the property, while an exception excludes part of the property (such as the west 15 feet) from the conveyance.

Adverse possession

Title may be lost and acquired through adverse possession. Adverse possession is a means of acquiring title where the occupant of the land has been in actual, open, notorious, hostile, exclusive and continuous possession of the property for a required statutory period of time. Actual possession means the possessor actually uses or occupies the land as if he were the owner. Open and notorious possession means the land is used in such a manner that the owner knew about it or should reasonably have known about it. Exclusive possession means the adverse possessor has exclusive control of the subject property. Hostile means the adverse possessor claims ownership, rejecting the claims of others. Possession is not hostile if the owner has ever given the occupant permission (i.e., a license) to occupy the land, even if that permission is later withdrawn. Therefore, the true owner could prevent a claim of adverse possession by asserting ownership rights and giving a license granting revocable permission to use the land. Continuous possession means that all elements required for adverse possession existed for a continuous period of at least the number of years required under state law. In some states, this period is shortened if the adverse possessor paid the property taxes on the land during the period of his possession. However, the possession need not be by the same person throughout that period. Through tacking, an adverse claimant can achieve the required period of possession by adding the time of his possession to that of any previous adverse possessors.

REVIEW: Conveyance of Title:

Title may be transferred to and from the government a number of ways: A patent may convey title from the government to private owners. Forfeiture gives possession of property to the government. Dedication is the gift of property to the public. Eminent domain is the right of the government or a company authorized by the government, such as a utility company, to acquire title to property for public use by paying compensation to the owner, through the process of condemnation. Escheat is the right of the government to take property when a person dies intestate and without heirs.

Gain of Land

Title to real property may be affected by physical action. The term for any additions to land or property, whether by natural or man-made causes, is ACCESSION. * Any addition to land. Man-made additions include the annexation of fixtures. When an owner builds a house on his land, that house becomes part of the title to the land. If a neighbor mistakenly puts a structure on another person's land, that structure can become part of the title to the land on which it is placed. * Manmade addition to land The addition to one's land by the gradual deposit of soil through natural causes is ACCRETION. For example, the owner of property on a shore or riverbank would acquire soil deposited (or accreted) on his land by the natural action of water and wind. * Natural gradual addition to land When a property boundary is the high water mark of a body of water, the property owner may acquire title to additional land by RELICTION. Reliction is the gradual recession of water from its usual high water mark so that the newly uncovered land becomes the property of the adjoining riparian property owner.

What makes a deed valid?

To be valid, a deed must be in writing, have words of conveyance, adequately describe the property, identify the grantor and grantee, be signed by the grantor, have a competent grantor, and be delivered. Upon intended delivery (by recording, placement in escrow or manual delivery), title passes immediately. The grantee must exist, but need not sign the deed or be competent.

Course Objectives

Upon completion of this lesson, the student should be able to: Define the term "title" as it pertains to real estate. Identify and describe how title may be transferred: to and from the government. by physical action. by adverse possession. upon death. by court action. Describe the basic requirements for a valid conveyance. Identify and describe various forms of deeds. Explain the differences between constructive notice and actual notice. Define recordation and explain why it is important in a real property transaction.

Testate (leaving a will_

When a person dies testate, the will is probated to ensure it is valid and its terms are carried out. An executor named in the will distributes the estate. Persons receiving ownership of real property through a valid will are called devisees. Personal property will pass by bequest or legacy to legatees. In community property states, when a married person dies testate, half the community property passes to the surviving spouse, and the other half of the community property and all separate property will pass by will. If there were no will, a surviving spouse would be entitled to all of the community property.

Intestate (no will)

When the deceased dies intestate, the estate is transferred by descent to the decedent's heirs. The estate is probated to assure that it is distributed to the appropriate heirs. The court will appoint an administrator to distribute the estate to the deceased's heirs under the state laws of intestate succession. If no heirs can be found, any real property will revert to the government through escheat. This is very rare.