Lesson 3- Transfer of Real Property

Competent Grantor

A deed is valid only if the grantor is competent when he signs it. In other words the grantor must be an adult of sound mind. In Washington, a grantor must be at least 18 years old to execute a valid deed.

In Writing

A deed must always be in writing. The statute of frauds is a state law that requires certain types of contracts and transactions to be put in writing, under the statute, an oral conveyance of title to real property is not valid.

Signed By Grantor

A deed must be signed by the grantor. A deed without the grantor's signature is ineffective, even if it has all of the other elements for validity. In contrast, the grantees signature isn't necessary. In fact, the grantee ordinarily doesn't sign the deed.

Good Faith Purchaser

A grantee who fails to record her deed can lose title to a subsequent good faith purchaser who did not have notice of the earlier conveyance. In a conflict between two purchasers, the one who records his deed first has good title to the property--even if the other purchaser's deed was executed first.

Adverse possession

A means by which a person may acquire title to property by using it openly and continuously without the owner's permission for the required statutory period.

Title Report

A report issued after a title search by a title insurance company, listing all defects and encumbrances of record

Transfer By Deed

A signature on a valid deed by the grantor is not enough to transfer title to the grantee. To carryout conveyance, acknowledgement, delivery, and acceptance are important steps.

All owners must sign

All of the owners must sign the deed as grantors.

What can be recorded

Almost any document affecting title to land may be recorded: a deed, a mortgage, an abstract of judgment, a lis pendens (a notice of pending legal proceedings that may affect property), and so on. A deed or other doc ament of conveyance must be acknowledged before it can be recorded, mainly to protect against forgeries.

Nuncupative will

An oral will can be valid if spoken while the testator is on her deathbed with two witnesses present. Can only transfer personal property worth less than $1,000. Real estate can never be transferred with this kind of will.

Holographic Will

An unwitnessed will written entirely in the testator's own handwriting. Washington law does not recognize holographic wills. It can only be valid in WA if a testator executes the will in a state where it is valid and then later moves to WA without making out a new will.

Acession

Any addition to real property from natural or artificial causes

Administrator

Appointed by the court if no executor was named

Executor

Appointed by the testator to carry out the instructions in the will

After-Acquired Title

Both general and special warranty deeds convey after-acquired title. An interest in the property that the grantor acquires after executing the deed.

Avulsion

Does not necessarily result in involuntary alienation. Occurs when land is violently torn away by flowing water or waves and deposited somewhere else, or when land is exposed by a sudden change in a watercourse. The owner still has title to that land, if there is some way to claim it. If unclaimed, it eventually becomes part of the property it is attached to.

Delivery and Acceptance

Even if all other steps have been done, the transfer only becomes effective when the grantor delivers the deed to the grantee and the grantee has accepted it. Physical delivery isn't absolutely necessary. The grantor may give the deed to an escrow agent to give to the grantee. Acceptance of the deed completes the transfer of title.

Statutory Dedication

Involuntary. Most often it is required in exchange for a benefit from a public entity. The county requires a land developer to dedicate land within a new subdivision for public streets. Otherwise the county will deny permission to subdivide.

Date of Execution

Not absolutely necessary. A deed can be valid even if it is undated. But as a matter of convenience it is important to include the date of conveyance on the deed

Exclusions and Reservations Clause

Not absolutely necessary. Lists any easements, liens, private restrictions that will burden the grantee's title. Valid encumbrances will still be in effect even if they aren't listed in the deed.

Habendum clause

Not absolutely necessary. Typically follows the granting clause. It defines or limits the grantees estate. It may specify fee simple ownership or some lesser interest such as a life estate. To have and to hold clause. If a warranty doesn't have a Habendum clause it is presumed to be a fee simple absolute.

Probate

Procedure to prove a will's validity. Intestate succession is supervised by the probate court.

Covenant of Quiet Enjoyment

Promises that the grantees possession will not be disturbed by any lawful claims of any third parties

Miscellaneous Deeds

Sherriff's Deed, Trustee's Deed, Tax Deed, Gift Deed

Death Deed

The deed must state that the transfer will take place on the grantors death and the deed must be recorded.

Covenant of Seisin

The grantor promises that she actually owns the interest that the deed is conveying to the grantee.

Intestate Succession

The law provides for the division of property by this process when someone dies without leaving a will. The property passes first to the surviving spouse, then to any surviving children, then to various other relatives. People who take property by this method are called heirs and have received property by descent. (rather than devise or bequest)

Eminent Domain

The power of the government to take (condemn) private property for public use, upon payment of just compensation to the owner. The power of eminent domain may be exercised by any government entity, an also by some semi-public entities, such as utility companies. Before the power of eminent domain can be exercised, the following requirements must be met; public use, just compensation.

Title Insurance

The premium for a title insurance policy is paid at closing. A single payment covers the entire life of the policy, which lasts as long as the insured holds an interest in the property.

Public Use

The proposed use must be a public use--that is, it must benefit the public. Taking property for a public park would qualify as a public use. In cases of mixed public and private benefit the question is more difficult, but generally there is no authority for the government to take one person's land for the sole purpose of turning it over to another person.

Conveyance

The transfer of real property from the grantor to the grantee. Naturally, it's impossible to convey something you don't own.

Common Law Dedication

The usual requirement for common law dedication is the owner's acquiescence in the public's use of her property for a prolonged period of time. If a property has been used by the public for long enough, a government entity can pass an ordinance accepting a common law dedication. The dedication may be treated as a transfer of ownership, or it may only establish a public easement, depending on the circumstances.

Tax Deed

When a government forecloses on property because the property taxes weren't paid, the foreclosure sale purchaser receives this deed

Intestate

When a person dies without leaving a valid will, she dies intestate

Dedication

When a private owner voluntarily or involuntarily gives real property to the public.

Endorsement

A buyer who wants coverage for a specific item not ordinarily covered by a particular type of policy may be able to purchase an endorsement to cover it.

Chain of title

A complete history of all the recorded interests in the property

Possession Provides Notice

A potential purchaser is also held to have constructive notice of the interests of parties in possession of the property, even if those interests aren't recorded. For example, if a tenant has possession under an unrecorded lease, a purchaser would have constructive notice of the lease, even if she never visited the property and is unaware of the tenant.

Wild Deed

A recorded deed that cannot be located under the grantee-grantor system of indexing. A deed that is outside the chain of title. The general rule is that a subsequent purchaser is not held to have constructive notice of a wild deed.

Codicil

An amendment to a will

Title Search

An inspection of the public record to determine all rights to a piece of property

Convey Community Property

Both spouses must sign the deed.

Special Warranty

Carries the same covenants as a general warranty, but with a limited scope. The covenants only cover problems that arose while the grantor owned the property. Likely to be used if the grantor is a corporation, or if the grantor is a fiduciary, such as the executor in an estate.

Voluntary Alienation

Deed, will, patent, dedication

Gift Deed

If one party gives property to another, they may use this deed. It is not supported by consideration, and is the easiest for a court to set aside if there is any hint it was used to defraud creditors.

Attorney in fact

If the grantor can't sign the deed himself, it may be signed by the grantors attorney in fact. Attorney's in fact are not necessarily lawyers. They're people grantors have appointed as their representatives. A document called a Power of Attorney is used to appoint an attorney in fact.

Title report

Issued by the title company. The report lists all defects and encumbrances that have been discovered in the public record; these items will be excluded from the policy coverage.

Living Grantee

It isn't necessary for the grantee to be legally competent, but the grantee must be alive at the time of conveyance. If the grantee is dead, the deed does not transfer title.

Testator

One who makes a will

Foreclosure

Persons holding liens against real property may force the sale of the property if the debts secured by their liens are not paid. Foreclosure is available for any type of lien that attaches to real property, including mortgages, deeds of trust, construction liens, an judgment liens.

Condemnation

The act of taking private property for public use under the power of eminent domain

Just compensation

The condemning entity must pay just compensation to the owner. As a general rule, just compensation is the fair market value of the property.

Identify the parties

The deed must identify the parties, the grantor and the grantee, it isn't absolutely necessary to state the grantees name in the deed, as long as it includes a description that makes it possible to identify her.

General Warranty

The most common type of deed, often referred to as warranty deeds. The grantor gives the grantees warranties (covenants) about the status of the title to the property. Their are 5 covenants associated with this deed. Seisin, Right to convey, Against encumbrances, Quiet enjoyment, and Warranty. Because its covenants are not limited to the grantors period of ownership, this warranty provides the greatest protection to the grantee and the greatest liability for the grantor.

Bill of Sale

The title used to transfer personal property from a seller to a buyer.

Bequeath

To transfer personal property by will

Patent

To transfer property into private hands, the government gave an individual or entity a document.

Devise

To transfer real property by will

Effect of recording

Two significant consequences; it gives constructive notice to the world. In addition, recording also creates a presumption that the recorded instrument is valid and effective. Recording will not serve to validate an otherwise invalid deed, however, nor will it protect against interests that arise by operation of law such as adverse possession.

Sheriff's Deed

Used to convey title to someone who purchases at a mortgage foreclosure sale.

Quiet Title

Used to remove a cloud on the title when the title cannot be cleared by the more peaceful means of an agreement and a quitclaim deed. The court decides questions of property ownership. The result is a binding determination of the various parties' interests in a particular piece of real estate.

Trustee's Deed

When a deed of trust is foreclosed on, a trustee's deed is used to convey title to the purchaser at the trustees sale.

Will

another type of document used to transfer ownership voluntarily. Uses a deed while he is alive to transfer property and uses a will upon his death. A valid will must meet 3 requirements, in writing, signed by the testator (person making the will), and signed by 2 witnesses

Accession

any addition to real property from natural or artificial causes. It can result in involuntary alienation. Accession includes; accretion, reliction, and avulsion

Homeowner's Coverage

for transactions that involve residential property with up to four units. This policy provides the buyer with much more extensive coverage than a traditional policy. It covers most of the title problems that an extended coverage policy does, plus some additional ones, such as violations of restrictive covenants.

Alienation

refers to all of the different methods by which real property can be transferred from one person to another. Whether accomplished by transfer of deed, a will, foreclosure, or in any other way a transfer of ownership is a form of this. It is the opposite of acquisition of property. Can be voluntary or involuntary

Acknowledgement

refers to signing a legal document in the presence of a formal witness, ordinarily a notary public. The witness should have no interest in the property being conveyed. The grantor gives the notary public proof of identity and signing the deed voluntarily. The notary also signs a statement showing she witnessed the signing of the document. In Washington a deed can be transferred without acknowledgement but it can't be recorded without it.

Standard Coverage Policy

was traditionally used to insure the property owner (the buyer) against defects in title, including hidden risks such as forgery. (This is why it is sometimes called an owner's policy.) It does not insure against the claims of a person in actual possession of the property (such as an adverse possessor) nor against problems that would be disclosed by an inspection of the property (such as an encroachment)

Chain of Title

A complete history of all the recorded interests in a piece of real property

Abstract of title

A condensed history of interests in the property

Abstract of Title

A condensed history of the recorded interests in a piece of real property

Partition

A suit for partition is a means of dividing property owned by more than one person whether co-owners cannot agree on how to divide it. In many cases the court will order the property sold and the proceeds divided among the co-owners.

Property Description

A valid deed must have an adequate property description. Although a complete legal description isn't required, the deed must make clear what property is being conveyed. A description is adequate if a surveyor could use it to locate the property.

Words of Conveyance

A valid deed must include words of conveyance, sometimes called a granting clause. The deed must explicitly say in some way that the property is being transferred from the grantor to the grantee. Any of several different words could be used such as grant or convey.

Recording Process

Accomplished by filing a deed or other document at the county records office in the county where the property is located. Documents are recorded chronologically, in the order in which they were filed for recording. Each recorded document is assigned a recording number

Quitclaim Deed (reformation deed)

Does not convey after-acquired title. It conveys only the interest in the property the seller has at the time the deed is executed without warranties, if the grantor has no interest then this deed conveys nothing to the grantee. A common reason for using this deed is to clear up minor title defects, which are often called clouds on the title. Clouds are problems appearing in the public record that cast doubt on the status of the title. This deed is not appropriate for a standard real estate transaction, a buyer should insist on a warranty deed. IF a seller is trying to use this deed, that should be a red flag for the buyer.

Adverse Possession

Form of involuntary alienation. The process by hich the possession and use of property can mature into title. Encourages the fullest and most productive use of land. It provides that someone who actually uses property may eventually attain a greater interest in the property than the owner that doesn't use it. Requirements in WA are: actual, open and notorious, hostile to the owner's interest, exclusive, and continuous and uninterrupted for a specific period of time.

Inverse Condemnation

If a property owner feels that her property has been taken or damaged by a public entity, She may file a lawsuit called an inverse condemnation action to force the government to pay the fair market value of the taken or damaged property.

Extended Coverage Policy

Insures against all matters covered by the standard policy, plus matters not of public record, such as the rights of parties in possession of the property, unrecorded construction liens, and encroachments. This is often used for the mortgagee's policy, a policy insuring the buyer's lender. Lenders require buyers to pay for a mortgagee's policy in virtually all transactions.

Consideration

Not absolutely necessary. The purchase money that the grantee gave the grantor for the property. It doesn't have to be stated in the deed document for it to be valid. A recital of consideration appears in many deeds. The recital doesn't state the actual purchase price. Instead it says something like $1 or $10 and other valuable consideration. The purpose of the recital is to indicate that the property was not a gift.

Constructive Notice

Notice of a fact that a person is held by law to have (as opposed to actual notice); he had the opportunity to discover the fact in question by searching public record.

Recorded

Once an interest in property has been transferred (voluntarily or involuntarily) the new owner protects his interest by recording the document of conveyance with the county clerk. Recording is a way to provide convenient access to information regarding ownership of a property to anyone who's interested.

Essential Elements of a Deed

The requirements for a valid deed: In writing, Signed by grantor, Identify parties, Competent grantor, specify a living grantee, words of conveyance and property description

Deed

Once land is in private hands, the most common method of voluntary alienation is by this method. The document a private land owner uses to transfer real property to someone else. The property owner is called the grantor, the person the owner is transferring the property to is called the grantee. Conveys real property, not personal property. 3 types; general warranty, special warranty, quitclaim.

Escheat

The reversion of property to the state after no one with a legal claim to the property comes forward to claim it. (This may happen, for example, because the owner died without leaving a will and without heirs)

Covenant of the Right to convey

The grantor promises that she has the right to convey the interest in question to the grantee

Covenant Against Encumbrances

The grantor promises that there are no easements, liens, or other encumbrances against the title that have not been disclosed to the grantee

Covenant of Warranty

The grantor promises to defend the grantees title against any claims superior to the grantee's that exist at the time of conveyance.

Reliction

When riparian or littoral land is enlarged by the gradual retreat of the body of water, the landowner acquires title to the newly exposed land. Like accretion, reliction must be very gradual. Reliction is also called dereliction.

Accretion

When riparian or littoral land is slowly enlarged by waterborne soil deposits (called alluvion or alluvium), the riparian or littoral owner acquires title to the new land. A key feature of accretion is that the build-up of soil must be so gradual that the process is virtually imperceptible.