Unit 6 Transfer of Title

Deed of trust

An instrument used to create a mortgage lien by which the borrower conveys title to a trustee, who holds it as security for the benefit of the note holder (the lender); also called a deed of trust. Deed in trust *Is the means by which a trustor conveys real estate to a trustee for benefit of a beneficiary

Voluntary alienation

(see alienation) The act of transferring property to another. Alienation may be voluntary, such as by gift or sale, or involuntary, as through eminent domain or adverse possession. A legal term for the transfer of title during the property owner's lifetime. An owner may transfer title by making a gift or by selling the property

Adverse Possession

***Ownership recognized by the courts after open, continuous, exclusive, actual, and notorious (hostile) use of another's land for a certain period set by state law.*** Is another means of involuntary transfer. An individual who makes a claim to certain property, takes exclusive possession of it by excluding the true owner and any other title claimants, and (most important) uses it, may take title away from an owner who fails to use or inspect the property for a period of years. The law recognizes that the use of land is an important function of its ownership. Possession by the claimant must have the following characteristics *Open - obvious to anyone who looks *Notorious - known by others *Continuous - uninterrupted *Adverse - against the true owner's right of possession. Adverse possession: The actual, open, notorious, hostile, and continuous possession of another's land under a claim of title. Possession for a statutory period may be a means of acquiring title. *Statutory periods range from as few as 5 years in some states to as many as 30 years *Shorter time period may be accompanied for the adverse possessor to make all property tax payments. *A state law may allow subsequent adverse owners to tack their years of possession under a claim of right, or color of title, such as a deed from the prior adverse owner that purports to convey ownership of the property. *To claim legal title, the adverse possessor normally files an action in court to receive undisputed title.

Involuntary transfer by operation of law

Carried by operation of law Condemnation Foreclosure or a mortgage loan Sale to satisfy delinquent tax or mortgage liens or mortgage liens.

Execution by the grantor(s)

Deed must be signed by all owners to convey the property

Easement by necessity

Easement by necessity is granted by the courts to prevent creation of landlocked property; it is only granted if there is no other access.

Easement by prescription/ prescriptive easement

Easement recognized by the courts after open, continuous, exclusive,actual, and notorious (hostile) use of another's land for a certain period set by state law. Possession or use must be open (visible), continuous, exclusive, (distinct), actual, and notorious (hostile -without permission) OCEAN

Deed executed pursuant to a court order

Executors', and administrators' deeds, masters', sheriffs' deeds, Used to convey title to property that is transferred by will or by court order Full consideration usually stated in the deed.

Acknowledgment

Formal declaration under the oath that the person who signs a written document does so voluntarily and the at the signature is genuine. Declaration made before a registered notary public or an authorized public officer A judge, justice of the peace, or some other person prescribed by state law. An acknowledgment is not essential to the validity of a deed unless it is required by state statute; however, a deed that is not acknowledged may not be legally sufficient for certain purposes. In most states, an unacknowledged may not be legally sufficient for certain purposes. If unacknowledged deed is not eligible for recording- an important act that puts the world on notice as to who owns the property. Acknowledgement: A formal declaration made before a duly authorized officer, usually a notary public by a person who has signed a document.

General warranty deed

General warranty deed: A deed in which the grantor fully warrants good, clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed. Provides the greatest protection to the buyer because the grantor is legally bound certain by certain covenants (promises) or warranties. Implied by the use of certain words specified by statute Include convey and warrant or warrant generally Covenant of seisin: the grantor warrants that he or she has the right to convey title to it. The grantee may recover damages up to the full purchase price if this covenant is broken. Grantor owns and has the right to convey. Covenant against encumbrances: The grantor warrants that the property is free from liens or encumbrances, except for any specifically stated in the deed. Encumbrances generally include mortgages, mechanics' liens, and easements. If this covenant is breached, the grantee may sue for the cost of removing the encumbrances. No undisclosed encumbrances (liens, restrictions, easements) Covenant of further assurances: The grantor promises to obtain and deliver any instrument needed to make the good. For example, if the grantor's spouse has failed to sign away dower rights, the grantor must deliver a quitclaim deed (discussed below) to clear the title. Future cooperation in signing additional documents Covenant of quiet enjoyment: The grantor guarantees that the guarantees that the grantee's title will be good against any third party who might bring a court action to establish superior title to the property. If the grantee's title is found to be interior, the grantor is liable for damages; that is the grantor will pay the grantee if the title is not good. Grantee will not be disturbed by others claiming title to the property 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. Guarantee of defense of title against claims such as liens or The grantor defends the title against defects the grantor created by all those who previously held title. Includes the most promises or covenants Greatest protection for the grantee (Buyer) Contains 5 covenants and warranties of title (see above)

Requirements for a valid deed

Grantor who has the legal competency to execute the deed. Grantee named with reasonable certainty to be identified Statement of consideration (usually required for recording of the deed) Granting clause (words of conveyance) Habendum clause, which defines the ownership right received by the grantee Accurate legal description of the property conveyed Any relevant exceptions or reservations to conveyance of full title Acknowledgment (notarization) of the signature of the grantor Delivery of the deed and acceptance by the grantee to pass title A deed may include a description of any limitations on the conveyance of a full fee simple estate and a statement of any exceptions and reservations (also known as "subject to" clauses that affect title to the property.

Transfer of title by descent

Heir: One who might inherit or succeed to an interest in land under the state law of descent when the owner dies without leaving a valid will.

Intestate

: The condition of a property owner who dies without leaving a valid will. Title to the property will pass to the decedent's heirs, as provided in the state law of descent. Without a valid will Title to the real estate passes to the heirs identified in the state's law of intestate succession. If no heirs can be identified or found, the state will acquire the property by the states power of escheat.

INVOLUNTARY ALIENATION

Land may be acquired through the process of accretion or actually lost through erosion. Earthquakes, hurricanes, sinkholes, and mudslides. Involuntary alienation: (see alienation) The act of transferring property to another. Alienation may be voluntary, such as by gift or sale, or involuntary, as through eminent domain or adverse possession. Title to property may be transferred without the owner's consent.

Legal descriptions

Legal descriptions describe only the land- appurtenances are presumed to transfer with the land unless specifically excluded.

Consideration

Money or something of value "One dollar and other good and valuable consideration" To be valid deed must contain a clause acknowledging that the grantor has received some form of consideration; something in return for deeding the described property to the grantee. When a deed conveys real estate as a gift to a relative, love, and affection may be sufficient consideration.

Competent Grantor

Must be of lawful age (18) A deed executed by a minor is voidable. Must be legally competent (of sound mind) A deed executed by someone who was mentally impaired at the time is voidable. But is not automatically void (of no legal effect) Grantor's name must be spelled correctly and consistently throughout the deed. 18, sane and sober Seller is grantor and buyer is grantee

Quitclaim deed

A conveyance that transfers whatever interest the grantor has in the specified real estate, without warranties or obligations. Provides the grantee with the least protection of any deed. Carries no covenants or warranties and generally conveys only whatever interest the grantor may have when the deed is delivered. If the grantor has no interest, the grantee will acquire nothing and will have no right of warranty claim against the grantor. Conveys title as effectively as a warranty deed if the grantor has good title when the deed is delivered , but it provides none of the guarantees of a warranty deed. The grantor only remises, releases, and quitclaim the grantor's interest in the property. Used to convey less than a fee simple estate Conveys only the grantor's right, title,or interest without any warranty that the grantor has any right, title, or interest. Used to cure a title defect called a cloud on the title If a name or word is misspelled on a warranty deed filed in the public record, a quitclaim deed with correct spelling may be executed to the grantee to perfect the title . Used when a grantor apparently inherited property but it is not certain that the decedent's title was valid. A warranty deed from the grantor in such an instance would oblige grantor's interest Most common uses of the quitclaim deed is for a simple transfer of property from one family to another ***"problem solver" deed Least liability for the grantor/ seller No covenants or warranties - "If I have an interest, I transfer that interest to you." Used to clear clouds on title (problem solver) Would use when grantor wants no future claims or liability

Execution of corporate deeds

A corporation can convey real estate only by the authority defined in its bylaws or on the basis of a resolution passed by its board of directors. If all or a substantial portion of a corporation's real estate is being conveyed, usually a resolution authorizing the sale must be secured from the shareholders. A deed conveying corporation owned real estate can be signed only by an authorized officer

Special warranty deed

A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of the grantor's tenure and ownership of the property and not against defects existing before that time, generally using the language, "by, through, or under the grantor but not otherwise Limits the grantor's defense of the title transferred by warranting *That the grantor received title and *That the property was not encumbered during the time the grantor held title, except as otherwise noted in the deed.

Exceptions and reservations

A deed may specifically note any encumbrances, reservations, or limitations that affect the title of being conveyed. Includes restrictions and easements that run with the land. A grantor may reserve some right in the land, such as an easement, for the grantor's use. A grantor may also place certain restrictions on a grantee's use of the property. Many deed restrictions have time limits and often include renewal clauses.

Granting clause

A deed must convey a granting clause or words of conveyance, that states the grantor's intention to convey the property. Granting clause:Words in a deed of conveyance that state the grantor's intention to convey the property at the present time. This clause is generally worded as "convey and warrant"; "grant", "grant bargain and sell"; or the like. A deed that conveys the grantor's entire fee simple interest usually contains wording such "to ABC and to her heirs and assigns forever." If less than the grantor's complete fee simple interest is conveyed Such as a life estate

Bargain and sale deed

A deed that carried with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. The grantor may add warranties to the deed. Contains no express warranties against encumbrances, but it does imply that the grantor holds title and possession of the property. Granting clause usually states a person's or entity's name and the phrase grants and releases or grants, bargains, and sells. Warranty is not specifically stated, the grantee has little legal recourse if title defects appear later. This deed is used in foreclosures and tax sales Buyer should purchase title insurance, if not provided by the seller. 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 equivalent to a special warranty deed to give the grantee similar protection. Does not warrant against liens or encumbrances but warrants the grantor's right to convey title.

Reconveyance deed

A deed used by a trustee under a deed of trust to return title to the trustor. Used by a trustee to return title to the trustor Should be recorded to prevent title problems in the future Lien theory states in which a deed of trust is treated as creating a lien on property, rather than transferring title, a document called a satisfaction of mortgage fulfills this same purpose. Conveyance from trustee back to trustor Is used when the borrower pays off a loan secured by a deed of trust.

Probate

A legal process by which a court determines who will inherit a decedent's property and what the estate's assets. Successor to the property title will be recognized Claims against the estate must be satisfied before the designated individual can take possession of the property. Judicial process for verifying the validity of the will and accounting for the decedent's assets. Process of distributing all of a deceased person's assets Wills must go through probate in order for the devisee to receive real property.

Open, notorious, continuous, hostile, and adverse use of another's property for prescribed period.

Process: Adverse possession Property Taken: Adverse Possessor

Land need for public use

Process: Condemnation by state's power of eminent domain Property Taken: Government body or designated authority

Person dies intestate; no heirs can be found

Process: Escheat Property Taken State or county

Nonpayment of a debt secured by real property

Process: Foreclosure Property Taken: Creditor

Grantee:

A person who receives a transfer of real property from a grantor. The person who receives property.

Words of conveyance (granting clause)

States that the seller is making a grant that conveys or transfers the warranties of the deed. Habendum clause defines the type of freehold estate being granted "To have and to hold forever" conveys fee simple absolute ownership

Transfer tax:

Tax stamps required to be affixed to a deed by state and or local law. *Grantors tax *On conveyances of real estate *Tax usually payable when the deed is recorded Calculating transfer taxes Transfer declaration form (or transfer statement or affidavit of real property value) *Must be signed by both the buyer and the seller *States ***The full sales price of the property ***Legal description ***Type of improvement ***The address, date, and type of deed ***Whether the transfer is between relatives or in accordance with a court order

CONVEYANCE OF A DECEDENT'S PROPERTY

Testate: Having made and left a valid will. Has prepared a will indicating how that person's real and personal property will be disposed of at the time of death. Intestate: without a valid will When a person dies intestate, real estate and personal property pass to the decedent's heirs according to the state's statute of descent and distribution. Intestate succession - no will Heirs / descendants are determined by state laws of descent. If there are no heirs, the property will escheat

Transfer of title by will

Testator is the person who has the will Will: A written document, properly witnessed, providing for the transfer of title to property owned by the deceased, called the testator. Made by a property owner to convey title to real and personal property after the owners death. Testator: A person who has made a valid will. A woman might be referred to as a testatrix, although a testator can be used for either a man or a woman. Devise: A transfer of real property by will. The decedent is the devisor, and the recipient is the devisee. Is the act of transferring a deceased person's interest in real property to another deed. Bequest is the act of transferring a deceased person's interest in real property to another deed. Gift of real property Devisee: A person who receives real property by will. Will can also include a bequest of a legacy, which is a gift of personal property For title to pass to the devisees, state laws require that, on the death of a testor, the will be filed with the court and probated Bequest is the act of transferring a deceased person's interest in personal property to another Bill of sale. The advantage of a will is that all heirs are known and there is no chance of escheat.

Habendum clause:

That part of a deed beginning with the words "to have and to hold," following the granting clause and defining the extent of ownership the grantor is conveying. When necessary to define or explain the ownership to be enjoyed by the grantee, a habendum clause may follow the granting clause. Begins with the words "to have and to hold" Its provisions must agree with those stated in the granting clause. Example: if a grantor conveys a time share interest or an interest less than fee simple absolute, the habendum clause would specify the owner's rights as well as how those rights are limited (a specific time frame or certain prohibited activities)

When a person dies, ownership of real estate passes to...

The co-owner by virtue of a joint tenancy with right of survivorship or a tenancy the entirety The party or parties named in a valid will The statutory heirs determined by the state's law of descent and distribution Title to property held in joint tenancy with right of survivorship or in tenancy by the entirety needs no court action for title to pass, but the death certificate should be filed so that it becomes part of the record of property ownership. When title passes by will or descent, the estate must go through a judicial process called probate.

Types of deeds

The grantee will want assurance that the grantor has the right to offer what the deed purports to convey. *General warranty deed *Special warranty deed *Bargain and sale deed *Quitclaim deed *Deed of trust *Reconveyance deed *Trustee's deed *Deed executed pursuant to a court order

Covenant of quiet enjoyment

The grantor guarantees the grantee's title will be good against any third party who might bring a court action to establish superior title to the property. If the grantee's title is found to be interior, the grantor is liable for damages; that is the grantor will pay the grantee if the title is not good. Grantee will not be disturbed by others claiming title to the property

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. Guarantee of defense of title against claims such as liens or

Covenant of further assurances

The grantor promises to obtain and deliver any instrument needed to make the good. For example, if the grantor's spouse has failed to sign away dower rights, the grantor must deliver a quitclaim deed (discussed below) to clear the title. Future cooperation in signing additional documents

Covenant of seisin

The grantor warrants that he or she has the right to convey title to it. The grantee may recover damages up to the full purchase price if this covenant is broken. Grantor owns and has the right to convey.

Covenant against encumbrances

The grantor warrants that the property is free from liens or encumbrances, except for any specifically stated in the deed. Encumbrances generally include mortgages, mechanics' liens, and easements. If this covenant is breached, the grantee may sue for the cost of removing the encumbrances. No undisclosed encumbrances (liens, restrictions, easements)

Key Points

The law presumes owners of real property will regularly inspect their property and protect their interest by giving a notice to cease and desist to anyone who is trespassing. Owners who do not inspect their property may lose their rights of ownership if another party possesses or uses the property for a statutory period of time. Title obtained by adverse possession or an easement by prescription is not voluntarily granted by the property owner but is granted through a court procedure. Owners who are aware of possession and use by another and have given the possessing/ using party permission (license) do not fall under this law. If all parties know and agree to the possession or use, it cannot be adverse possession or easement by prescription Notorious and hostile imply "without permission".

Grantor

The owner transferring title to or an interest in real property to a grantee. Owner who transfers property A deed is executed (signed) by the grantor. Conveys property to a grantee.

Characteristics of conveyance deeds

The parties are the *Owner/ seller, who is the grantor *Buyer, who is the grantee The purpose of a deed is voluntary transfer of title between the grantor and the grantee. A seller of real property is required to provide a written deed. Every deed conveys whatever interest is held by the grantor, unless it specifically states it is conveying a lesser interest. The major difference between types of deeds is the extent of the promises given by the grantor to the grantee Deeds do not guarantee or prove ownership *Recorded deed provide very strong evidence of ownership Deeds do not have to be recorded for title to transfer; passes upon acceptance by the grantee

Title

The right to ownership or the ownership or the ownership of land. The evidence of ownership of land. Represents the owner's bundle of legal rights. Serves as evidence of that ownership Title to real estate is a way of referring to ownership but is not an actual printed document. Exception: The Torrens Certificate (provides evidence of ownership) May be transferred voluntarily by sale or gift May be transferred involuntarily by operation of law. May transfer while the owner lives or after the owner dies, either by will or by state law if the owner died without leaving a will.

Delivery to and acceptance by the grantee (s)

Title passes upon acceptance by the grantee

Signature of grantor

To be valid, a deed must be signed by all grantors named in the deed. Some states also require witnesses to or notarization of the grantor's signature Power of attorney has written authority to sign legal documents for a grantor. Has written authority to execute and sign one or more legal documents for another person. A special power of attorney provides authority to carry out all of the business dealings of the person giving it. Does not have to be an attorney at law, but could be. POA must be recorded in the county where the property is located. A grantor's spouse is required to sign any deed of conveyance to waive any marital or homestead rights (varies from state to state) May require a seal (or simply the word seal) to be written or printed after an individual grantor's signature.

Delivery and acceptance

A title is not considered transferred until the deed to the property is actually delivered to and accepted by the grantee. The grantor may deliver the deed to the grantee personally or through a 3rd party Title is said to pass only when a deed delivered and accepted Effective date of the transfer of title from the grantor to the grantee is the date of delivery of the deed itself. Delivery and acceptance are usually presumed if the deed has been examined and registered by the county clerk

Legal description of real estate

To conform to the intent of the grantor, a deed must contain an accurate legal description of the real estate conveyed. Land is considered adequately described if a professional surveyor can locate the property and accurately mark its boundaries using the description.

Trustee's deed:

Trustee's deed: A deed executed by a trustee conveying land held in a trust. *Conveyance from trustee to third party *Used when a trustee conveys real estate held in the trust to anyone other than the trustor. *Trustee's deed must state that the trustee is executing the instrument in accordance with the powers and authority granted by the trust instrument *Sheriff's deed/ certificate of sale transfers title at the end of a foreclosure proceeding or statutory redemption period.

Special (limited) deed Grantor

Warrants title against the grantor's actions, but not those of earlier owners of the property. Grantor only warrants title against defects that may have arisen during grantors ownership not those of earlier property owners. No warranties against previous encumbrances

Deed

A written instrument that, when executed and delivered, conveys title to or an interest in real estate. A document by which an owner of real estate conveys the right, title, or interest owned in the parcel of real estate to someone else. Statute of frauds requires that all deeds be in writing. An instrument that conveys property from the grantor to the grantee.

Conveying ownership

Act of conveying ownership (transferring title) of real estate from one party to another is alienation. A private grant is from individuals,, using a deed A public grant is from the government to individuals, using a land patent A dedication is from individuals to the government, by recording a plat