Ch. 5 - Title and Title Transfer

Some states require ______ to complete a valid conveyance. Most states require it before they will record the deed. A deed without an ________, therefore, tends to endanger one's claim to a property.

acknowledgment

Commonly, the testator names

an executor, or personal representative, to oversee the settlement of the estate. If a minor is involved, the testator may identify a guardian to handle legal affairs on behalf of the minor.

A beneficiary of a will is called

an heir or devisee.

For example,

an owner might "sell" his property to three unrelated parties. The first party buys the property at the earliest date, the second party pays the highest price, and the third party receives the best deed, a warranty deed. Who owns legal title to the property?

Warrant of quiet enjoyment.

assures that the grantee will not be disturbed by third party title disputes

Warranty forever; warranty of title

assures that the grantee will receive good title, and that grantor will assist in defending any claims to the contrary

Warrant of seisin.

assures that the grantor owns the estate to be conveyed, and has the right to do so

Warrant of further assurance

assures that the grantor will assist in clearing any title problems discovered later.

Warrant of encumbrances

assures that there are no encumbrances on the property except those expressly named

To be legally valid, delivery of the deed requires that the grantor

be competent at the time of delivery intend to deliver the deed, beyond the act of making physical delivery

Involuntary alienation occurs primarily by the processes of

descent and distribution, escheat, foreclosure, eminent domain, adverse possession, and estoppel.

Habendum clause.

describes the type of estate being conveyed (fee simple, life, etc.)

A combination of actual and constructive notice

generally, provides the most indisputable evidence of real property ownership.

The grantor must declare before a notary or other authorized person that the , and that the _______. The grantor then receives a certificate of acknowledgment signed by the notary.

grantor's identity and signature are genuine; the deed execution was a free, voluntary act

Thus, if John Doe records the deed of conveyance,

he has imparted, and Mary Pierce has received, constructive notice of ownership. Possession of the property can also be construed as constructive notice, since a court may rule that Mary should have visited the property to ascertain whether it was occupied.

Tenendum clause.

identifies property being conveyed in addition to land

2.Holographic

in the testator's handwriting, dated and signed

1.Witnessed

in writing and witnessed by two people

4.Nuncupative

made orally, and written down by a witness; generally not valid for the transfer of real property

In practice, the terms "title" and "legal title" are

often used interchangeably.

3.Approved

on pre-printed forms meeting the requirements of state law

Validity of the grantee's acceptance requires

only that the grantee of the deed have physical possession of the deed or record the deed.

someone who possesses all ownership interests

owns legal title to the property.

Grantors may give __________to other parties, authorizing them to execute deeds on their behalf. The ___________ authorization should be recorded to ensure a valid conveyance. be acknowledged.

power of attorney

Reddendum clause, or reserving clause.

recites restrictions and limitations to the estate being conveyed, e.g., deed restrictions, liens, easements, encroachments, etc.

Conveyance clauses and covenant, or warrant, clauses

set forth all the necessary provisions of the conveyance.

Warranty against grantor's acts

states the assurance of a trustee, acting as grantor on behalf of the owner, that nothing has been done to impair title during the fiduciary period.

If the transferor of title is a private party,

the conveyance is a private grant.

If the transferor of title is a government entity and the recipient is a private party,

the conveyance of title is a public grant.

The property transferred by the will is

the devise.

Granting clause, or premises clause.

the only required clause; contains the conveyance intentions; names the parties; describes the property; indicates nominal consideration.

A will takes effect only after

the testator's death. It is an amendatory instrument, meaning that it can be changed at any time during the maker's lifetime.

Once accepted, a deed is accepted,

the title passes to the grantee. The deed has fulfilled its legal purpose and it cannot be used again to transfer the property.

When the transfer of title uses a written instrument,

the transfer is called a conveyance.

The illustration underscores the difficulty of proving title to real estate:

there is no absolute and irrefutable proof that a party holds legal title. Our legal system has developed two forms of title evidence-- actual notice and constructive notice-- to assist in the determination.

If the grantee loses the deed,

there is no effect on the grantee's title to the estate. The grantor, for example, cannot reclaim the estate on the grounds that the grantee has lost the deed after it was delivered and accepted. Nor can the grantee return the property by returning the deed. To do so, the grantee would need to execute a new deed.

The testator or devisor, (the maker of the will) describes how

they want the property distributed.

2.Guardian's deed.

used by a court-appointed guardian to transfer property of minors or mentally incompetent persons

1.Personal representative's deed.

used by an executor to convey a decedent's estate; also called an executor's deed

7.Partition deed.

used to convey co-owned property in compliance with a court order resulting from a partition suit; a partition suit terminates an estate when one or more co-owners want to dissolve their relationship and are unable to do so without the assistance of a court.

3.Sheriff's deed.

used to convey foreclosed property sold at public auction

6.Master deed.

used to convey land to a condominium developer; accompanied by the condominium declaration when recorded

9.Tax deed.

used to convey property sold at a tax sale

4.Deed of trust.

used to convey property to a third party trustee as collateral for a loan; on satisfaction of the loan terms, the trustee uses a reconveyance deed to convey the property back to the borrower

5.Deed in trust.

used to convey property to the trustee of a land trust. not to be confused with deed of trust

8.Patent deed.

used to transfer government property to private parties

The probate court's objectives are to:

validate the will, if one exists identify and settle all claims and outstanding debts against the estate distribute the remainder of the estate to the rightful heirs If the will does not name an executor, the court will appoint an administrator to fulfill this role.

Legal title is distinct from equitable title,

which is the interest or right to obtain legal title to a property in accordance with a sale or mortgage contract between the legal owner and a buyer or creditor.

The overall quit claim covenant is:

"I may or may not own, and I won't defend."

The prominent types are

1.Bargain and sale deed. 2.General warranty deed. 3.Special warranty deed. 4.Quitclaim deed.

DEEDS OF CONVEYANCE

1.Delivery and acceptance 2.Validity 3.Deed clauses and covenants 4.Statutory deeds 5.Special purpose deeds 6.Transfer tax

The principal conveyance clauses are:

1.Granting clause, or premises clause. 2.Habendum clause. 3.Reddendum clause, or reserving clause. 4.Tenendum clause.

INVOLUNTARY TITLE TRANSFER

1.Laws of descent 2.Abandonment 3.Foreclosure 4.Eminent domain 5.Adverse possession 6.Estoppel

WILLS

1.Types of will 2.Validity 3.Probate

A deed of conveyance usually contains one or more of the following covenants, depending on the type of deed.

1.Warrant of seisin. 2.Warrant of quiet enjoyment. 3.Warrant of further assurance 4.Warranty forever; warranty of title 5.Warrant of encumbrances 6.Warranty against grantor's acts

Types of wills

1.Witnessed 2.Holographic 3.Approved 4.Nuncupative

Probate of a will

A court proceeding called probate generally settles a decedent's estate, whether the person has died testate (having left a valid will) or intestate (having failed to do so). Real property may be exempted from probate if it is held in a land trust. Probate of real property occurs under jurisdiction of courts in the state where the property is located, regardless of where the deceased resided.

Ownership of legal title is a function of evidence.

A court will generally rule that the person who has the preponderance of evidence of ownership is the owner of the property. In the example, if the first two buyers did not receive a deed while the third party did, the third party may have the best evidence and be ruled the legal title-holder. However, what if the first buyer had moved into the house and occupied it for six months before the original owner sold the property to the second and third buyers? And what if the second buyer, after searching title records, reports that the seller never really owned the property and therefore could not legally sell it to anyone! Now who owns the property?

Statutory Deeds

A deed of conveyance can make a variety of warranties and convey a range of interests. The most common deeds are statutory deeds, in which the covenants are defined in law and do not need to be fully stated in the deed.

Foreclosure

A property owner who fails to fulfill loan obligations or pay taxes may lose an estate through foreclosure.

Quitclaim deed.

A quitclaim deed transfers real and potential interests in a property, whether an interest is known to exist or not. The grantor makes no claim to any interest in the property being conveyed and offers no warrants to protect the grantee.

Special purpose deeds

A special purpose deed is one tailored to the requirements of specific parties, properties, and purposes. 1.Personal representative's deed. 2.Guardian's deed. 3.Sheriff's deed. 4.Deed of trust. 5.Deed in trust. 6.Master deed. 7.Partition deed. 8.Patent deed. 9.Tax deed.

The Torrens system

A title registration system used especially in Massachusetts, Hawaii, Illinois, and Minnesota, When a certificate of title is first applied for in the Torrens system, the title is searched or examined, a court hearing is held (as in a land court), and a decree confirming title and ordering registration (as with the registrar of deeds) is issued. A certificate of title is then given to the owner, after which the property may be conveyed by executing deeds, delivering the certificate of title to be cancelled, and issuing a new certificate to the new owner. The title registered in a Torrens system is usually guaranteed and marketable, making title insurance unnecessary and greatly reducing the time spent researching the state of the title during subsequent conveyances.

Constructive notice.

Constructive notice, or legal notice, is knowledge of a fact that a person could have or should have obtained. The foremost method of imparting constructive notice is by recordation of ownership documents in public records, specifically, title records. Since public records are open to everyone, the law generally presumes that when evidence of ownership is recorded, the public at large has received constructive notice of ownership. By the same token, the law presumes that the owner of record is in fact the legal owner.

Conveyance clauses.

Conveyance clauses describe the details of the transfer.

Covenant, or warrant, clauses.

Covenant clauses present the grantor's assurances to the grantee.

Delivery and acceptance of a deed

Execution of a valid deed in itself does not convey title. It is necessary for the deed to be delivered to and accepted by the grantee for title to pass.

Exemptions from transfer tax include:

Exemptions from transfer tax transfer within the immediate family consideration less than a certain amount transfer between government entities or non-profit organizations trust deed transfer and reconveyance tax deed

Example of Intestate proceeding with heirs.

For example, John Astor dies intestate, leaving a wife and four children. The laws of descent in his state provide that the surviving spouse receives one-third of the estate, and the four children receive equal shares of the remaining two thirds.

Quiet title suit.

If a party responsible for encumbering title refuses to quitclaim the interest, the owner may file a quiet title suit. This requires the lienor to prove the validity of an interest. If the defendant is unable to do so, the court removes the cloud by decree.

Intestate proceeding with no heirs.

If an intestate decedent has no heirs, the estate escheats, or reverts, to the state or county after all claims and debts have been validated and settled.

Testate proceeding.

If the decedent died with a valid will, the court hears the claims of lienors and creditors and determines their validity. First in line are the superior liens: those for real estate taxes, assessment taxes, federal estate taxes, and state inheritance taxes. If the estate's liquid assets are insufficient to pay all obligations, the court may order the sale of personal or real property to satisfy the obligations.

Intestate proceeding with heirs.

If the decedent died without a valid will, the estate passes to lawful heirs according to the state's laws of descent and distribution, or succession. Laws of descent stipulate who inherits and what share they receive, without regard to the desires of the heirs or the intentions of the deceased.

Bargain and sale deed.

In a bargain and sale deed, the grantor covenants that the title is valid but may or may not warrant against encumbrances or promise to defend against claims by other parties. If there is a warrant of defense, the deed is a full warranty bargain and sale deed. The overall bargain and sale covenant is: "I own, but won't defend."

Special warranty deed.

In a special warranty deed, the grantor warrants only against title defects or encumbrances not noted on the deed that may have occurred during the grantor's period of ownership or trusteeship. The deed does not protect the grantee against claims that predate the owner's period of ownership. Special warranty deeds are often used by trustees and grantors who acquired the property through a tax sale. The overall special warranty covenant is: "I own and will defend against my acts only."

Notice of title

In any legal system that permits private ownership of real property, there will always be disputes as to who truly owns a particular parcel of real estate.

Involuntary alienation.

Involuntary alienation is a transfer of title to real property without the owner's consent.

Laws of descent

Involuntary alienation occurs when a title-holder dies without a valid will. The state's statutes of descent and distribution identify heirs and the respective shares of the estate they will receive. In the absence of heirs, title transfers to the state or county by escheat.

Thus if Mary Pierce drives to a property and sees directly that John Doe is in possession of the home,

Mary then has received actual notice of John Doe's claim of ownership. Her knowledge is obtained through direct experience.

Abandonment

Property that has been abandoned for a statutory period may also escheat to the state or county.

Recording (the deed)

Recording is not necessary to make a deed valid. However, it is in the grantee's best interests to do so. Recording the deed gives the public constructive notice of the grantee's ownership.

Validity of A Will

State law establishes requirements for a valid will. The law generally requires that: the testator be of legal age and mentally competent the testator indicate that the will is the "last will and testament" the will be signed the completion of the will be witnessed and signed by the witnesses the will be completed voluntarily, without duress or coercion

Transfer tax

State law usually requires payment of a documentary stamp tax on a conveyance of real property. The tax is based on the actual price of the property conveyed, thus enabling taxing authorities to ascertain current market value for ad valorem tax purposes. Payment of the tax is evidenced on the deed.

Testate proceeding.#2

The court must also hear and satisfy legal life estate claims, including those for dower, curtesy, homestead, and elective share. These interests may prevail even if the will does not provide for them. Once all claims have been satisfied, the balance of the estate's assets passes to the rightful heirs free and clear of all liens and debts.

Validity of a deed

The deed must: be delivered and accepted have a competent grantor and legitimate grantee The grantor must be living, of legal age, and mentally competent. If grantor is a corporation, the signing party must be duly authorized. The grantee must be living or have legal existence, but need not be of legal age or mentally competent. be in writing contain a legal description contain a granting clause The deed must express the grantor's present desire and intention to transfer legal title to the grantee. include consideration The deed must be accompanied by valuable (monetary) or good (love and affection) consideration, but the amount need not reflect the actual price in most cases. be signed by the grantor The deed must be signed by the grantor, but need not be signed by the grantee unless the deed contains special provisions requiring the grantee's acceptance.

General warranty deed.

The general warranty deed, or warranty deed for short, is the most commonly used deed. It contains the fullest possible assurances of good title and protection for the grantee. The deed is technically a bargain and sale deed in which the grantor promises to defend against any and all claims to the title. The overall general warranty covenant is: "I own and will defend."

Quitclaim deed#2

The quitclaim is typically used to clear title rather than convey it. Where there is a possibility that prior errors in deeds or other recorded documents might cloud (encumber) the title, the relevant parties execute a quitclaim deed to convey "any and all" interest to the grantee.

Actual notice.

The term "notice" is synonymous with "knowledge." A person who has received actual notice has actual knowledge of something. Receiving actual notice means learning of something through direct experience or communication.

In states that use the Torrens system,

The title passes only when the deed has been registered on the certificate of title and a transfer certificate has been issued to the new owner.

Transferring title

Transfer of title to real estate, also called alienation, occurs voluntarily and involuntarily.

Eminent domain

Various government and public entities can transfer private property to the public sphere by the power of eminent domain. The transfer is involuntary, even though the owner receives compensation. For example, a city government wants to widen a highway to accommodate growth. The government uses eminent domain to condemn and purchase all properties abutting the thoroughfare in order to complete the construction project.

Voluntary alienation.

Voluntary alienation is an unforced transfer of title by sale or gift from an owner to another party.

During the contractual period of time

When ownership of legal title is contingent upon the contract, the buyer or lender owns equitable title to the property.

For example,

a buyer enters into a contract for deed to purchase a house. The seller lends the bulk of the purchase price to the buyer for a term of three years. The buyer takes possession of the property and makes payments on the loan. During this period, the seller retains legal title, and the buyer owns equitable title. If the buyer fulfills the terms of the agreement over the three-year period, The buyer has an enforceable contract to obtain legal title.

A living owner makes a private grant by means of

a deed of conveyance, or deed.

A will, or more properly, a last will and testament, is

a legal instrument for the voluntary transfer of real and personal property after the owner's death.

A deed is

a legal instrument used by an owner, the grantor, to transfer title to real estate voluntarily to another party, the grantee.

Another common example is

a mortgage loan transaction that gives the lender the right to execute a strict foreclosure, which transfers legal title to the lender in the event of a default. With this contractual right, the lender has equitable title to the property.

In proving real estate ownership,

a person provides actual notice by producing direct evidence, such as by showing a valid will. Another party receives actual notice by seeing direct evidence, such as by reviewing the deed, reading title records, or physically visiting the property to see who is in possession.

A private grant that occurs when the owner dies is

a transfer by will.