unit 5

timber or mineral deed

As discussed in Unit 2, some ownership rights can be severed from the land and transferred by deed, such as the harvesting of timber or minerals located on the property.

delivery and acceptance

Before a transfer of title by conveyance can take effect, there must be delivery and acceptance; that is, actual delivery of the deed by the grantor and either actual or implied acceptance by the grantee. Delivery may be made by the grantor to the grantee personally or to a third party who is authorized by the grantee to accept the deed (such as a lawyer). Title is said to pass when a deed is delivered and voluntarily accepted. In North Carolina, recordation of the deed by the buyers or their agent is recognized as acceptance. The effective date of the transfer of title from the grantor to the grantee is the date of delivery of the deed itself.

Consideration

Consideration (something of value) of some form must be stated. To be legally binding, the deed must express adequate consideration. Consideration is the price paid for the promises stated in the deed. While economic value (e.g., money) is the most common form of consideration, consideration does not have to involve money. Deeds can state that the property is being exchanged for "love and affection." Deeds in many, if not most, cases do not recite the actual sales price. Instead, they simply recite "for $10.00 paid and good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged."

transfer by descent

Every state, including North Carolina, has a law known as a statute of descent and distribution. When a person dies intestate (without having left a will), the decedent's real estate and personal property pass to the decedent's heirs according to this statute. In effect, the state makes a will for anyone who did not do so. A court appoints a person to distribute the deceased's property according to the provisions of the North Carolina Intestate Succession Act. This person is called an administrator if a man or an administratrix if a woman. As noted previously, if the property owner dies intestate and leaves no heirs, the property will escheat to the state of North Carolina. North Carolina's provisions for intestate succession are quite complicated, and a lawyer should be consulted when intestate succession questions arise.

Governmental condemnation of land is an example of voluntary alienation. True False

F Governmental condemnation is an example of involuntary alienation. Foreclose is another example. Involuntary alienation is the transfer of property without the owner's wishes or consent.

The type of deed lease likely to incur future liability for the seller is the special warranty deed. TF

False The type of deed least likely to incur future liability for the seller is the quitclaim deed. The quitclaim deed has no covenants or warranties requiring the seller to respond to problems with title that might arise in the future.

eminent domain

Federal, state, and local governments; school boards; some government agencies; and certain public and quasi-public corporations and utilities have the power of eminent domain. Eminent domain is the right of the government to acquire privately owned real estate for public use.

general warranty deed

For a purchaser of real estate, a general warranty deed provides greater protection than any other deed. It is the best deed for the grantee, but it gives the grantor the greatest degree of liability. It is referred to as a general warranty deed, a full covenant and warranty deed, or simply a warranty deed because the grantor is legally bound by certain basic covenants or warranties:

transfer of title is referred to as

-alienation which means the act of transferring property to another.

A quitclaim deed is frequently used to cure a defect, called a

-cloud on the title n the recorded history of a real estate title. For example, if the name of the grantee is misspelled on a warranty deed placed in the public record, a quitclaim deed with the correct spelling may be executed to the grantee to perfect the title. A quitclaim deed is sometimes used to convey ownership rights from one spouse to the other in a divorce agreement. A quitclaim deed also is used when a grantor allegedly has inherited property but is not certain of the validity of the title of the decedent from whom the property was inherited. The use of a warranty deed in such an instance could carry obligations of warranty, while a quitclaim deed would convey only the grantor's interest.

three types of deeds

1. General Warranty Deed 2. Special Warranty Deed 3. Quitclaim Deed

keto v city of new london

In the past, the proposed use for taking property was to be for the public good. However, in June 2005, the U.S. Supreme Court in Kelo v. City of New London significantly changed the definition of public use. The court held that local governments can condemn homes and businesses for private or economic development purposes.

lien foreclosure

Land also may be transferred without an owner's consent to satisfy debts contracted by the owner that have become liens against the real property. In such cases, the liens are foreclosed, the property is sold, and the proceeds of the sale are applied to pay off the debts. Debts that could be foreclosed include mortgage loans, real estate taxes, mechanics' liens, and general judgments against the property owner. Foreclosure will be discussed in more depth in Unit 11.

bargain and sale deed

A bargain and sale deed contains no express warranties against encumbrances. However, it does imply that the grantor holds title and possession of the property. The granting clause usually states a person's name or name of an entity and the words grants and releases or grants, bargains, and sells. Because the warranty is not specifically stated, the grantee has little legal recourse if title defects appear later. In some areas, this deed is used in foreclosures and tax sales. The buyer should purchase, or the seller provide, title insurance for protection. A covenant against encumbrances initiated by the grantor may be added to a standard bargain and sale deed to create a bargain and sale deed with covenant against the grantor's acts. This deed is closely equivalent to a quitclaim deed. Warranties used in general warranty deeds may be inserted in a bargain and sale deed to give the grantee similar protection.

Special Warranty Deed (Limited warranty deed)

A conveyance that carries only two covenants is called a special warranty deed (also known as a limited warranty deed). The grantor warrants that he or she received title to the land and that the property was not encumbered during the time he or she held title except as noted in the deed. Special warranty deeds generally contain the words remise, release, alienate, and convey in the granting clause. Any additional warranties to be included must be specifically stated in the deed.

Voluntary Alienation

Most transactions utilizing real estate brokers involve voluntary alienation. Voluntary alienation (transfer) of title may be made by either gift or sale with the wishes and consent of the property owner. To transfer title by voluntary alienation during an owner's lifetime, that owner must use some form of deed.

elements that are not required in a deed

Nonessential elements often appear in deeds but are not required for validity. Nonessential elements include the following: Deeds do not have to be witnessed. Deeds do not have to be dated; although, for practical matters, it may be wise to do so. Deeds do not have to include a statement as to the exact amount of consideration (the amount of money that was paid for the property). Deeds do not have to be acknowledged (i.e., notarized). Deeds do not have to be recorded to be valid, but under the Connor Act, the grantees must record the valid deed to protect their interest as to third parties under the law. Effective in 1999, deeds do not have to be sealed in North Carolina to be valid. Standard deed forms may continue to have the word seal after the signature; however, it is no longer required to create a valid deed. Signing under seal does have certain legal advantages such as extending the statute of limitations protecting the parties' rights from three years to 10 years. Note that acknowledgment (or notarization) is necessary before a deed can be recorded, and recording a deed is necessary to protect the grantee's interests in the property. Recording is discussed later in this unit.

correction deed

A correction deed is used when there has been an error in a previous deed. For example, if the description of the property in the original deed was incorrect, a correction deed will be used to make the correction. Errors in names or dates would also be corrected by this deed.

Action to Quiet Title

A court action that establishes ownership when ownership cannot be traced through an unbroken chain of title. Even if the adverse possessor fulfills all the legal requirements for adverse possession, he or she must go to court to get clear title to the property. This is done with a lawsuit called an action to quiet title. It is difficult to prove title by adverse possession, and until a court decides that title has been acquired, the claimant's title is considered to be unmarketable.

deed

A deed is a written instrument by which an owner of real estate intentionally conveys right, title, or interest in the parcel of real estate to another. A deed is evidence of title. The owner is referred to as the grantor, and the person who receives title is called the grantee (see Legal Terms for Parties in Real Estate Transactions). A deed is executed (signed) only by the grantor(s). The grantee(s) does not sign the deed.

trustees deed

A deed of conveyance executed by a trustee is a trustee's deed and is used when a trustee named in a will, trust agreement, or trust deed conveys the real estate to anyone other than the trustor. The trustee's deed sets forth the fact that the trustee executes the instrument in accordance with the powers and authority granted to him or her by the trust instrument. A trustee's deed is generally used to transfer title after a foreclosure auction.

The words of conveyance in a deed

A deed of conveyance transfers a present interest (freehold estate) in real estate, and it must contain words that state the grantor's intention to convey the property at this time. An expression of intent to convey at some future time is inadequate. Such words of conveyance are often called the granting clause. Depending on the type of deed and the obligations agreed to by the grantor, the wording is generally convey and warrant; grant, bargain, and sell; or remise, release, and quitclaim.

deed of release

A deed of release is used to release a parcel of property from a mortgage or deed of trust lien when the real estate loan has been paid in full.

Adverse Possession

A person takes possession & use of a property belonging to another. Possession must be open, notorious, hostile & uninterrupted for a certain period of time. Adverse possession is another means of involuntary transfer. For persons to make a claim of ownership under adverse possession they must have some reason to believe the land is theirs. Owners who do not use or inspect their land for a number of years may lose title to another person who makes a claim to the land, takes possession, and, most importantly, uses the land.

Covenant of Further Assurance

A promise that the grantor will perform further acts reasonably necessary to correct any defects in the title or in the deed instrument. The grantor promises to obtain and deliver any instrument needed to make the title good. For example, if an error in the deed is found, the grantor agrees to resign a new deed to correct the mistake.

Quitclaim Deed (non-warranty deed)

Provides the grantee with the least protection of any deed. It carries no covenant or warranties and conveys only such interest, if any, that the grantor may have when the deed is delivered. Also, used to correct a defect, called "cloud on the title" Ex. Correction of a misspelled name and can be used to convey ownership rights from one spouse to the other in divorce agreement. (Good for Grantor's interest)

NC inestate sucession act

The North Carolina Intestate Succession Act provides for the distribution of the property of an intestate person (one who dies without a valid will). This statute allows for the equal division of property among eligible heirs, or, in the event of no heirs, having the property escheat to the North Carolina State Educational Assistance Authority. This statute does not override an active survivorship clause in a deed.

gift of real property

The gift of real property by will is known as a devise, and a person who receives real property by will is known as a devisee. Technically, an heir is one who takes property by the law of descent, but the term is commonly used to include devisees as well. A legacy or bequest is a gift of personal property; the person receiving personal property is known as a beneficiary. In North Carolina, the term devise can be broadly used to refer to both real and personal property.

covenant of quiet enjoyment

The grantor guarantees that the grantee's title will be good against third parties who might bring court actions to establish superior title to the property. If the grantee's title is found to be inferior, the grantor is liable for damages.

Covenant of Warranty Forever

The grantor promises to compensate the grantee for the loss sustained if the title fails at any time in the future. The grantor guarantees that if at any time in the future the title fails, he or she will compensate the grantee for the loss sustained. However, it is in the best interest of the grantee to obtain title insurance because at the time of a later claim, the grantor may be dead or financially insolvent.

covenant of seisin and the right to convey (general warranty deed)

The grantor warrants that he or she is the legal owner of the property and has the right to convey title to it. Delivery of seisin is the actual transfer of title.

Covenant against encumbrances

The grantor warrants that the property is free from any liens or encumbrances except those of record. Encumbrances would generally include such items as mortgages, mechanics' liens, real estate tax liens, protective covenants, and easements.

adverse posession OCEAN

The mnemonic OCEAN reminds us that the possession of the claimant must be the following: Open (well known to others) Continuous (uninterrupted for the required period) Exclusive (not shared with another) Adverse to the true owner's possession (the adverse possessor must intend to claim that the land occupied is his or her own) Notorious/hostile (without the permission of the owner)

the term title has two functions

The term title has two functions: (1) it represents the bundle of legal rights the owner possesses in the real estate, and (2) it denotes the facts that, if proven, enable a person to recover or retain ownership or possession of a parcel of real estate.

covenants in a general warranty deed are

These covenants in a general warranty deed are not limited to matters that occurred during the time the grantor owned the property; they extend back to its origin. Note that the first three covenants are most important.

Deeds executed pursuant to court order

This classification covers deeds such as a sheriff's deed, a tax deed, a guardian's deed, and an executor's deed. These deeds are used to convey title to property that is transferred by court order or by will. One characteristic of these special-purpose deeds is that the full consideration is usually stated in the deed. This is done because the deed is executed pursuant to a court order; because the court has authorized the sale of the property for a given amount of consideration, this amount should be exactly stated in the document.

involuntary alienation

A transfer of title to real property without the owner's consent . Title to property also can be transferred by involuntary alienation—that is, without the owner's wishes or consent (see Involuntary Alienation). Such transfers are usually carried out by operation of law and range from government condemnation of land for public use to the sale of property to satisfy delinquent tax or mortgage liens.

a valid deed must contain certain essential elements

A valid deed must contain certain essential elements, including the following: The deed must be in writing. The grantor must have the legal capacity to execute a deed. Grantee named with reasonable certainty must be identified. There must be adequate words of conveyance. There must be an accurate legal description of the property conveyed. The deed must be signed by the grantors. The deed must be delivered to and voluntarily accepted by the grantee.

transfer by will

A will is an instrument made by a mentally competent owner to convey title to real and personal property on the owner's death. A will takes effect only after death; until that time, any property covered by the will can be conveyed by the owner and thus removed from the owner's estate. An ownership interest, such as joint tenancy or tenancy by entirety, that contains survivorship rights cannot be affected by a will. In North Carolina, if spouses own property as tenants by the entirety, that property cannot pass by will. Neither spouse can disinherit the other spouse by will.

Signature of Grantor

To be valid, a deed must be signed by all the grantors (or their authorized agents) named in the deed. In North Carolina, if the grantor is married, both the grantor and the grantor's spouse must sign the deed even if only one spouse is named in the deed.

deed of gift

When a grantor conveys property as a gift (that is, no consideration or only token consideration has been accepted for the property), a deed of gift is used. A deed of gift must be recorded within two years or it becomes void. Because no consideration is exchanged, there is no need to pay excise tax.

escheat

When a person dies intestate (without a will) and leaves no heirs, the title to that person's real estate passes to the state by the state's power of escheat.

condemnation

is the process by which the government exercises this right, by either judicial or administrative proceedings. In the taking of property, just compensation is to be paid to the owner, and the rights of the property owner are to be protected by due process of law. Ideally, the public agency and the owner of the property in question agree on compensation through direct negotiation, and the government purchases the property for a price considered fair by the owner. In some cases, the owner may simply dedicate the property to the government as a site for a school, park, or another beneficial use. Sometimes, however, in cases where the owner's consent cannot be obtained, the government agency can initiate condemnation proceedings to acquire the property. Even in the taking of the property through condemnation, the property owner must be paid just compensation. If the taken property

Title

to real estate means the right to or ownership of the land. The word title also is used to refer to the documentary evidence of the right of ownership, such as a deed. The word title refers to a summation of all the things property owners possess to prove and protect their ownership interest in property.