Transfer of Title

Rquirements for a Will

-A will must be prepared and executed according to the laws of the state in which the testator resides. If the testator owns property in any other state, the will should also comply with the laws of the state in which the real estate is located. -A testator must have legal capacity to make a will. -A testator must also understand that the described property will go to those persons named in the will, who may or may not be the testator's natural heirs—those persons identified by the state law of descent and distribution. -Must be Voluntary -In most states, a written will must be signed by its testator before two or more witnesses, who must also sign the document. The witnesses should not be individuals who are named in the will as recipients of any property. -While living, a testator may alter a will at any time. Any modification or addition to a previously executed will is contained in a separate document called a codicil, which must comply with state law to be valid.

How to Calculate transfer tax

Calculating Transfer Taxes A state has a transfer tax of $1.50 for each $500 (or fraction of $500) of the sales price of any parcel of real estate. The transfer tax is to be paid by the seller. To calculate the transfer tax due in the sale of a $300,000 house, use the following two steps: Value ÷ dollar amount per taxable unit = taxable units Taxable units × rate per unit = tax In this example: $300,000 ÷ $500 = 600 taxable units 600 × $1.50 = $900 The seller in this transaction must pay a transfer tax of $900 to the state. In many states, a transfer declaration form (or transfer statement or affidavit of real property value) must be signed by both the buyer and the seller or their real estate professionals. The transfer declaration states the full sales price of the property; its legal description; the type of improvement; the address, date, and type of deed; and whether the transfer is between relatives or in accordance with a court order.

How to remember legal terms OR vs EE

Example: Grantor vs Grantee - the grantor is the property OwneR. Other OR vs EE Terms: DEVISE: Devisor/Devisee DEED: Grantor/Grantee LEGACY: Lagator/Legatee LEASE: Lessor/Lessee MORTGAGE: Mortgagor/Mortgagee OFFER: Offeror/Offeree OPTION: Optionor/Optionee SUBLEASE: Sublessor/Sublessee TRUST: Trustor/Trustee

Deed Executed Pursuant to Court Order

Executors' and administrators' deeds, masters' deeds, sheriffs' deeds, and many others are all deeds executed pursuant to a court order. These deeds are established by state statute and are used to convey title to property that is transferred by will or by court order. The form of the deed must conform to the laws of the state in which the property is located. One common characteristic of deeds executed pursuant to court order is that the full consideration is usually stated in the deed. Instead of "$10 and other valuable consideration," for example, the deed would list the actual sales price.

Warranties listed in a General Warrantly Deed

-Covenant of seisin: The grantor warrants that he or she owns the property and has the right to convey title to it. The grantee may recover damages up to the full purchase price if this covenant is broken. -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. - Covenant of further assurances: The grantor promises to obtain and deliver any instrument needed to make the title 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. - Covenant of quiet enjoyment: The grantor 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 inferior, the grantor is liable for damages; that is, the grantor will pay the grantee if the title is not good. -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. - 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 origins. The grantor defends the title against defects the grantor created as well as defects created by all those who previously held title.

Tyoes of Deeds Exempte from Transfer Tax

-Gifts of real estate -Deeds not made in connection with a sale (such as a change in the form of co-ownership) -Conveyances to, from, or between government bodies -Deeds by charitable, religious, or educational institutions -Deeds securing debts or releasing property as security for a debt -Partitions -Tax deeds -Deeds pursuant to mergers of corporations -Deeds from subsidiary to parent corporations for cancellations of stock

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 -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.

Grantor

-Must be of legal age. A deed conveyed by a minor is voidable. After reaching legal adult age, the minor can choose to treat the deed as a valid conveyance or can have the conveyance recognized as of no legal effect by a court. - Must be legally competent. As long as the grantor can understand the action that is being taken, they are competent. If the grantor is deemed incompetent, propery can only be conveyed by the court. - The grantor's name must be spelled correctly throughout the entire deed. If the grantor has changed names, it must be referenced in the deed.

Warranties found in a Special Warranty Deed

-That the grantor received title -That the property was not encumbered during the time the grantor held title, except as otherwise noted in the deed In effect, the grantor defends the title against the grantor's actions, but not those of earlier owners of the property. The granting clause generally contains these words: "Grantor remises, releases, alienates, and conveys." The grantor may include additional warranties, but they must be specifically stated in the deed. In areas where a special warranty deed is in common use, the purchase of title insurance typically is viewed as providing adequate additional protection to the grantee.

Holographic Will

Hand Written Will - accepted by just a few states.

Testate

Having made and left a valid will.

Involuntary Alienation

Involuntary Alienation Title to property may be transferred without the owner's consent by involuntary alienation. Involuntary transfers are usually carried out by operation of law—such as by condemnation, foreclosure of a mortgage loan, or a sale to satisfy delinquent tax or mortgage liens.

Transfer Tax

Many states have enacted laws providing for a state transfer tax (also referred to in some states as a grantor's tax) on conveyances of real estate. In these states, the tax is usually payable when the deed is recorded. In some states, the taxpayer purchases stamps from the recorder of the county in which the deed is recorded and the stamps must be affixed to the deed before it can be recorded. In other states, the clerk of the court or county recorder simply collects the appropriate transfer tax amount in accordance with state and local law. The transfer tax may be paid by either the seller or the buyer, or split between them, depending on local custom or agreement in the sales contract. The actual tax rate varies and may be imposed at the state, county, and/or city level. For example, the rate might be calculated as $1.10 for every $1,000 of the sales price, as $0.55 for every $500 of the sales price, or as a simple percentage of the sales price.

Trustees Deed

A deed executed by a trustee conveying land held in a trust. The trustee's deed must state that the trustee is executing the instrument in accordance with the powers and authority granted by the trust instrument.

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.

Charasterisitcs of Adverse Possession (ONCHA)

O - Open N - Notorious C - Continuous H - Hostile A - Adverse

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."

Exceptions and Rerservations

A deed may specifically note any encumbrances, reservations, or limitations that affect the title being conveyed. This might include such things as restrictions and easements that run with the land. In addition to citing existing encumbrances, 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. Developers often restrict the number of houses that may be built on each lot in a subdivision. Such private restrictions must be stated in the deed or contained in a previously recorded document, such as the subdivider's master deed, that is expressly referred to in the deed. Many of these deed restrictions have time limits and often include renewal clauses.

Bargain and Sales Deed

A deed that carries 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. The granting clause usually states a person's or entity's name and the phrase 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 title insurance, if it is 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. Warranties used in general warranty deeds may be inserted in a bargain and sale deed to give the

Reconvenyance Deed

A deed used by a trustee under a deed of trust to return title to the trustor. As with any document of title, a reconveyance deed should be recorded to prevent title problems in the future. In a "lien theory" state 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.

Acknowledgement

A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document. An acknowledgment (that is, a formal declaration before a notary public) 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, for instance, an unacknowledged deed is not eligible for recording—an important act that puts the world on notice as to who owns the property.

Nuncupative Will

Oral will - accepted still by just a few states

Probate

A legal process by which a court determines who will inherit a decedent's property and what the estate's assets are. Probate proceedings take place in the county in which the decedent last resided. If the decedent owned real estate in another county, probate would occur in that county as well. The probate court acts on its own volition as well as through the executor named in the will or an administrator or personal representative appointed by the court. If there is no will, or the will fails to name an executor. The court: -publishes required notices of the pending probate; -proves or confirms the validity of the will, including ruling on any challenges to the will; determines the precise assets in the estate of the deceased person; and -identifies the people to whom the estate's assets are to pass. The purpose of probate is to properly allocate and distribute the assets of the deceased. All assets must be accounted for, and the decedent's debts must be satisfied before any property is distributed to the heirs In addition, applicable federal estate taxes and state inheritance taxes must be paid before any distribution. One way in which property owners can avoid the delay and expense of probate is by establishing a living trust while still living and transferring title to real and personal property to the trust. In a revocable living trust, the person establishing the trust is the trustor as well as the trustee and the terms of the trust can be changed at any time (or terminated) during the life of the trustor. On the trustor's death, the trust need not go through a probate proceeding as title automatically passes to the beneficiary named in the trust. The advice of an attorney should be sought to create the trust, to successfully transfer property to it, and to file the necessary documentation on the death of the trustor. It is important that all of the trustor's property be transferred to the trust, or part of the estate will still have to go through probate. The living trust also has no effect on the value of the estate for estate tax purposes.

Testator

A person who has made a valid will. A woman might be referred to as a testatrix, although testator can be used for either a man or a woman.

Grantee

A person who receives a transfer of real property from a grantor. A deed is executed (signed) by the grantor.

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. Its provisions must agree with those stated in the granting clause.

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.. 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. The necessary period of uninterrupted possession is a matter of state law. The statutory periods range from as few as 5 years in some states to as many as 30 years in others. A shorter time period may be accompanied by the requirement for the adverse possessor to make all property tax payments. A state may allow subsequent adverse owners to tack their years of possession together to create the necessary period of adverse use. A subsequent adverse owner usually must take 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.

Voluntary Alienation

The 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.

Types of deeds...

The most common deeds are the following: -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

Quitclaim Deed

A quitclaim deed provides the grantee with the least protection of any deed. It 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. A quitclaim deed can convey 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. Through a quitclaim deed, the grantor only remises, releases, and quitclaims the grantor's interest in the property, if any. A quitclaim deed is usually the only type of deed used to convey less than a fee simple estate. This is because a quitclaim deed conveys only the grantor's right, title, or interest without any warranty that the grantor has any right, title, or interest. A quitclaim deed is frequently used to cure a title defect, called a cloud on the title. For example, if the name of the grantee is misspelled on a warranty deed filed 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 also used when a grantor has 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 the grantor to warrant good title, while a quitclaim deed would convey only the grantor's interest, whatever it may be. One of the most common uses of the quitclaim deed is for a simple transfer of property from one family member or co-owner to another.

Grantor

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

Title

The right to ownership or the ownership of land or the evidence of ownership of land. It represents the owner's bundle of legal rights. Title to real estate is a way of referring to ownership but is not an actual printed document. However, In states that recognize a Torrens certificate, it is the certificate itself that provides evidence of ownership.

Who might use a Speical Warranty Deed

A special warranty deed may be used by fiduciaries such as trustees, executors, and corporations. A special warranty deed is appropriate for fiduciaries because they lack the authority to warrant against acts of predecessors in title (the former owners). A fiduciary may hold title for a limited time without having a personal interest in the proceeds. Sometimes a special warranty deed is used by a grantor who has acquired title at a tax sale.

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 third party. Title is said to pass only when a deed is delivered and accepted. The 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.

Devise

A transfer of real property by will. The decedent is the devisor, and the recipient is the devisee.

Consideration

A valid deed must contain a clause acknowledging that the grantor has received some form of consideration; that is, something in return for deeding the described property to the grantee. Generally, the amount of consideration is stated in dollars. When a deed conveys real estate as a gift to a relative, love and affection may be sufficient consideration. In most states, it is customary to recite a nominal consideration, such as "$10 and other good and valuable consideration."

Signator 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, as described below. Most states permit someone with a power of attorney (written specific authority) to sign legal documents for a grantor. The person having power of attorney has written authority to execute and sign one or more legal instruments for another person. The power of attorney will be a special power of attorney if it is created only for a specific act or acts. A general power of attorney provides authority to carry out all of the business dealings of the person giving it.

Grantee

To be valid, a deed must name a grantee. The grantee must be specifically named so that the person to whom the property is being conveyed can be readily identified from the deed itself. If more than one grantee is involved, the granting clause should specify their individual rights in the property. For instance, the clause might state that the grantees will take title as joint tenants or tenants in common. This is especially important when specific wording is necessary to create a joint tenancy.

Transfer of Corporate Property

Varies state to state, but two rules consistently apply: - 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. Rules pertaining to not-for-profit corporations vary even more widely. Because the legal requirements must be followed exactly, an attorney should be consulted for all corporate conveyances.

How does ownership of real estate pass when a person dies?

When a person dies, ownership of real estate passes immediately to -the co-owner by virtue of a joint tenancy with right of survivorship or a tenancy by the entirety; the party or parties named in a valid will; or 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 in which the successor to the property title will be recognized; usually, claims against the estate must be satisfied before the designated individual(s) can take possession of the property. The party named in a will could be the trustee of either an existing trust or a testamentary trust established by the will.

Intestate

Without a valid will.

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. If the Grantor is conveying a limited interest, it must state so.

Deed of Trust

is the means by which a trustor conveys real estate to a trustee for the benefit of a beneficiary. The real estate is held by the trustee to fulfill the purpose of the trust.

Will

A written document, properly witnessed, providing for the transfer of title to real property and personal property owned by the deceased, called the testator. This type of property transfer differs from a deed, which must be delivered during the lifetime of the grantor and that conveys a present interest in property. The parties named in a will have no rights or interests as long as the party who made the will is alive; they acquire interest or title only after the owner's death. Only property owned by the testator at the time of the testator's death may be transferred by will. The 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 testator, the will be filed with the court and probated. Probate is the formal judicial process for verifying the validity of a will and accounting for the decedent's assets, and is discussed below. The process can take several months—or considerably longer—to complete before the estate is settled. A will cannot supersede the state laws of dower, curtesy, and homestead, which were enacted to protect the inheritance rights of a surviving spouse in certain real property owned by the decedent. In most states, the surviving spouse is further protected by a statute that provides for certain personal property of the decedent to go to the surviving spouse if the will does not provide the minimum statutory inheritance. In either case, the surviving spouse must decide whether or not to contest the will.

Deed

A written instrument that, when executed and delivered, conveys title to or an interest in real estate. All deeds must be in writing.