Conveying Title--Deed

Deed Types

A grantor may convey several types of deeds, depending on the form in which title is being conveyed. Not every conveyance comes with a fully warrantied title. Following are the most common types of deeds used in real estate.

Covenant of seisin:

The grantor owns the title specified in the deed.

Consideration doesn't always appear on the first line of a Deed.

As long as it's included somewhere in the document, it meets the requirement for this essential deed element.

Deed Essentials

As required by the statute of frauds, every deed must be in writing. Oral conveyances for the transfer of an interest in real property aren't recognized by law.

Note: In Latin, the word "deed" means

action or transaction.

A deed is also called

an instrument of conveyance.

Acknowledgment is

an oath of a subscribing witness, such as a notary public.

A recorded deed proves

that the previous property owner conveyed the property to the person named as the grantee on the deed.

In a deed, the grantor is often referred to as

the "party of the first part,"

A deed

written and signed legal document that legally transfers (conveys) title to real property from the old owner (the grantor) to the new owner (the grantee).

Guardians Deed

Court appointed deed given to a guardian in charge of the sale of real estate

Varying Words by deed and choice:

1. "Forever warrants the title to said premises" is language used for a warranty deed. 2. "Quits any and all claims to said premises" is language used for a quit claim deed.

A Deed must have the following essential elements:

1. Grantor/grantee 2. Act of conveyance (granting clause) 3. Consideration 4. Legal description 5. Habendum clause 6. Limitations and "subject to" clause 7. Signature of the grantor 8. Acknowledgment/recording 9. Delivery and acceptance

Consideration

In a deed it must include evidence that something of value (usually money) is being exchanged. The deed may state "One dollar [or "10 dollars"] and other good or valuable consideration," for instance.

Words of Conveyance

A Phrase that constitutes the act of conveyance in a deed

Signature of the Grantor

In order to execute a legal document, one or both parties must sign. To execute a deed, the grantor conveying the interest to the property must sign. The grantor executes the deed. The grantee isn't required to sign unless the grantee is assuming a mortgage. For instance, with a condominium unit, a grantee will sign to indicate that the grantee is assuming the obligations of the declaration (it's like the constitution of the condo).

Delivery and Acceptance

Just as with other types of contracts, to affect a transfer of title by deed, delivery and acceptance must occur. The grantor must deliver a valid (preferably acknowledged) deed to the grantee, and the grantee must accept it. When these are accomplished, the title is transferred. Delivery may be made directly to the grantee or to an agent of the grantee, such as an attorney, real estate broker, or the title company issuing the title. Once delivery is made, acceptance is presumed.

Bargain and Sale Deed

A bargain and sale deed may come with or without covenants of warranty. In most states, a bargain and sale deed with a covenant is called a special warranty deed.

Delivery and Acceptance

Much like other types of contracts, to effect a transfer of title by deed, delivery and acceptance must occur. The grantor must deliver a valid deed to the grantee (preferably acknowledged by a public official, such as a notary), and the grantee must accept it. When these are accomplished, the title is transferred. Delivery may be made directly to the grantee or to an agent of the grantee, such as an attorney, real estate broker, or the title company issuing the title. Once delivery is made, acceptance is presumed. The presumption is made stronger upon the recording of the deed.

Legal Description

Obviously you can't lawfully convey something unless the parties agree on what's being conveyed. Therefore, the legal description is an important section of the deed.

Habendum Clause

A descripption of the act of conveyance. It's not always used, but when it is used, it must agree with the conveyance clause.

Conveyance by Dedication

Often, in order to obtain a permit, a developer will be asked to donate a portion of the property to common use, for parks, green space, sidewalks, or even access roads. This is known as dedication by deed. Frequently, a quitclaim deed is used for this purpose. As long as the developer owns the land, and the local government accepts the deed, it's an effective way to convey property.

Deed of Trust

Some states use a deed of trust as the security for mortgage loans. In these states, there are three parties to the loan: the lender (beneficiary), the borrower (trustor), and a third-party (trustee). The trustee holds the deed, and the buyer has equitable title to the property. When the borrower fulfills the loan terms (pays the loan off), the deed is released to the borrower. If the borrower doesn't repay the loan, the trustee is authorized to foreclose on the property and will likely convey the property using a trustee's deed.

This is called nominal consideration

The deed may state "One dollar [or "10 dollars"] and other good or valuable consideration," for instance.

Words (or Act) of Conveyance

The deed must have words of conveyance that signify the grantor's intention to transfer title to the grantee. In our sample deed, this wording is contained in the same section that named and identified the grantor and grantee.

Alternatively, sometimes a developer has "leftover" land that is unusable due to slope, topography, or design, and it's in the developer's best interest to dedicate this land.

The developer gets a tax write-off (for the gift of the land), and the maintenance of the land is placed in the local government's hands. Sometimes developers will offer land in lieu of responsibility for road creation, access, or other requirements imposed by the development. As you can imagine, not all dedications by deed are accepted, particularly when there are strings attached.

Executor's Deed

The executor's deed is a type of bargain and sale deed with a covenant. An executor's deed conveys real property from a decedent's estate to a buyer. An executor can do this only if the will or court of law granted the executor this authority. An executor's deed, sheriff's deed, and many other deed types are all examples of court-ordered deeds, or deeds executed to a court order. Court-ordered deeds must have the full consideration stated in the deed, usually because the deed is executed pursuant to a court order, and the court has authorized the sale for a specific amount of consideration, which must match what is stated in the deed.

Full Covenant and Warranty Deed

The full covenant and warranty deed (aka general warranty deed) contains the strongest and broadest guarantee of all the deed types, and the greatest protection of the grantee's ownership interest. "Full covenant" typically means that six covenants are included. A covenant, as you may remember, is an agreement, contract, or written promise.

Covenant of quiet enjoyment:

The grantor assures that the grantee won't be disturbed in the use and enjoyment of the property because of a title defect passed on by the grantor.

Covenant against encumbrances:

The grantor assures the grantee that there are no encumbrances against the title other than those set forth in public record or the deed itself.

Covenant of right to convey:

The grantor has the capacity and right to convey title.

Covenant for further assurances:

The grantor promises to provide any additional assurances that the grantee reasonably requires and will perform any acts necessary to correct any defects in the title being conveyed.

Covenant of warranty:

The grantor will warrant and defend the title to the grantee against the lawful claims of others. This is the best warranty—and most important—for protecting the grantee, as it contains no limits as to the possible claimants protected against.

Limitations and Subject to Clause

The limitations and subject to clause is not always present, but when it is, its purpose is to dictate the ways in which a property may or may not be used. An example of a limitation would be a deed restriction, such as limiting fence type or height. A deed may also indicate that the transfer of title is subject to an easement.

Quitclaim Deed

The quitclaim deed doesn't offer any grantee warranties; it simply releases the grantor's property rights to the grantee. The deed does not state that the grantor has any title or interest (and the grantor may not) and makes no warranties as to the title's quality. Signing the quitclaim deed merely prevents the grantor from later claiming interest in or ownership of the property.

A legal description in a deed may contain any or all of the following:

A street address (this won't suffice as a complete legal description and must also include one of the following types of legal descriptions) 1. A metes-and-bounds property description 2. A plat reference or lot and block number 3. A tax assessor number 4. A monument

To have and to hold

To possess and keep. One way to remember this is to think of "have" and "habendum" starting with similar sounds. A habendum clause will usually contain the phrase "to have and to hold."

Acknowledgment and Recording

You can't record a deed unless it's legal and has been acknowledged.

Acknowledgment and Recording

You can't record a deed unless it's legal and it's been acknowledged.

Another example of dedication by deed would be when

a corporation dedicates a parcel of property to the municipality in which its building is located. For instance, a park or pathway skirting the corporate structure may be dedicated to the community for public use. Again, this provides a tax write-off for the corporation and relieves the corporation of the burden of ongoing maintenance.

The grantor must state to the notary that the signing of the deed is

a voluntary act. While the deed is valid between the parties without an acknowledgment, recording (and therefore acknowledgment) is vital if the grantee wants to protect the title against future buyers of the same property from the same grantor. Therefore, the grantee should always expect to receive an acknowledged deed.

Lenders will lend on bargain and sale deeds provided

appropriate covenants are in place. One without such covenants offers very little protection for the grantee, and so would not be acceptable to lenders for mortgage purposes. Real-estate owned (REO) properties (properties that lenders have reclaimed after a failed foreclosure sale) and properties sold for taxes may be conveyed with this type of deed.

Bargain and sale deeds don't provide

assurances about or protect the grantee from what may have occurred with the property before the current owner came into its possession, nor does the grantor warrant the deed for the future.

A referee's deed

contains no covenant or warranties but does imply ownership (seisin). A referee's deed is used in bankruptcy proceedings and foreclosures. In a foreclosure auction, it is the legal document that gives ownership of the foreclosed property to the highest bidder.

Acknowledgment

is an oath of a subscribing witness, such as a notary public. The grantor (seller) must confirm to the notary that he's signing the deed voluntarily. The deed is valid without an acknowledgment but recording protects the grantee from the grantor selling the same property to future buyers. Therefore, the grantee should always require an acknowledged deed, which is typically recorded at the office of the county clerk of the county where the property is located.

The grantor

is the person conveying the title. In a typical real estate transaction, this will be the seller, who will convey the title to the property to the buyer. For the conveyance to be legal, the grantor must be of legal capacity, meaning mentally competent and of the age of majority. It's also required that the grantor be specifically named and positively identified.

The grantee

is the person receiving title. In a typical real estate transaction, this will be the buyer, who will receive the title to the property from the seller. In contrast to grantors, grantees don't have to be legally competent and needn't have reached the age of majority to receive title. They couldn't, of course, convey title if they weren't legally competent, but they can receive title. A person who can't grant property under the law may use a guardians' deed to do so, which would require court permission.

In a deed, the grantee is referred to as

the "party of the second part."

A deed is typically recorded at

the county clerk's office where the property is located.

Bargain and sale deed- Special Warranty Deed

the grantor is implying good title and possession of the property. If you're representing a buyer who's acquiring a property under a bargain and sale deed, determine whether the deed contains specific warranties. A bargain and sale deed with covenants ensures that the grantor hasn't encumbered the property in any way except as stated in the deed. Without that warranty, a grantor could've sold easements in a checkerboard across the property, making the property virtually worthless to a future owner.

Quitclaim deeds are commonly used when

there is a possible heir or other party with a potential interest in the property (such as a former spouse after divorce), which creates a "cloud" on the title. A cloud on title is a question that lenders and title companies want to clear up. Signing of a quitclaim deed removes the cloud and creates a good and marketable title. Quitclaim deeds are also used to clear clouds from paid (but unreleased) liens and claims of relatives after estate probation.

As long as the intent of the grantor matches the

understanding of the grantee, and the intent conveys the transfer of ownership, it likely meets the legal requirements.