Real Estate Chapter 5

Grantee

Person receiving the title. Must be identifiable with sufficient certainty.

The Conner Act

Requires recordation of most real estate related documents to be enforceable against third parties.

Trusts

Living/testamentary Trusts: Created while one is alive Trustor = creator Trustess = administrator w/fiduciary duties Beneficiary = one who benefits Transfers real/personal property to trustee Revocable Example: grandfather trust for grandchild, daughter administers

Consideration

(payment) of some form must be stated.

Granting clause

(words of conveyance) must be used.

Nonessential elements of a deed include the following:

- Does not need to be dated - Does not need to show amount of consideration (payment) - Does not need to be acknowleged - Does not have to be recorded, but highly recommended - Does not have to be sealed

Special warranty deed (limited warranty deed)

Carries only two warranties/covenants. Warranty that the grantor received title and warranty that property was unencumbered by grantor.

How do we transfer Title

During lifetime: Voluntary- Deed Involuntary- Condemnation, Foreclosure, Adverse possession, Bankruptcy After Death: Voluntary- Will Involuntary- Intestate Succesion through Escheat

Title Assurance: 5 criteria of a marketable title

1) be free from any significant liens and encumbrances. 2) disclose no serious defects. 3) be free of doubtful questions of law or fact to prove its validity. 4) protect a purchaser from the hazard of litigation or any threat to quiet enjoyment of the property. 5) convince a reasonably well-informed and prudent person, acting on business principles and willful knowledge of the facts that the property could in turn be sold or mortgaged at a fair market value.

In NC the Requirements for a valid conveyance are:

1) deed must be in writing. 2)The grantor must have the legal capacity to execute deed. (of age and legally competent). 3)Both the grantor and the grantee must be identified. 4)There must be adequate words of conveyance. 5)Must be an accurate legal description of the property conveyed. 6)The deed must be signed by the grantors. 7)The deed must be delivered to and voluntarily accepted by the grantee.

Types of Deeds

1) general warranty deed 2) special warranty deed 3) quitclaim deed

Transfer of a Deceased Person's Property

1)By descent (intestate succession). If no will or heirs property will escheat to state. 2)Transfer of title by will. In NC, if a husband and wife own property as tenants by the entirety, that property cannot pass by will. 3)The gift of real property by will is known as devise, and a person who receives real property by will is known as a devisee. 4) Bequest is a gift of personal property to a beneficiary, Legacy is a gift of money.

Special-Purpose Deeds used in NC

1)Correction deed- correct an error in deed. 2)Deed of gift- Must be recorded w/in 2 years or void. 3)Deed of release- release a parcel of property from a mortgage lien when loan has been paid in full. 4)Deed in lieu of foreclosure. 5)Trustee's deed- Ttrustee is conveying real estate to someone other than the trustor. (i.e foreclosure). 6)Timber or mineral deed- when ownership rights have been severed. 7)Deeds executed pursuant to court order-used to convey title to property that is transferred by court order or by will.

Requirements for Adverse Possession

In NC with "color of title" requires 7 yrs. Without requires 20yrs. Requires a lawsuit called ACTION TO QUIET TITLE. Open Continuous Exclusive Adverse Notorious

Habendum clause

Must define ownership interest taken by the grantee; it specifies limits on ownership, such as with a time-share.

Bargain and Sale Deed

No express warranty: Implication that grantor holds title and possession but gives no guarantee against encumbrances.

Grantor

Person who transfer title. Must be of legal age and legally competent to execute (sign) a deed. A deed executed by a minor is voidable. - Mental impairment at time of signing deed makes the deed voidable. - If the grantor has been declared incompetent by a judge, the deed is void. - All names the grantor has used should be provided.

Quitclaim deed (non-warranty deed)

Provides grantee with the least protection. It carries no covenant or warranties and conveys only such interest, if any, that the grantor may have when the deed is delivered. Quitclaim deed is frequently used to cure a defect, called a cloud on the title, in the recorded history of a real estate title. Could be used in a divorce.

General warranty deed

Provides greater protection than any other deed. Best for grantee. Greatest degree of liability for grantor. Grantor legally bound by certain basic covenants or warranties: 1) Cov. of seisin and the right to convey, 2) Cov. against encumbrances, 3) Cov. of quiet enjoyment, 4) Cov of further assurance, and 5) Cov of warranty forever. Grantor not only responsible for time of his ownership but back to the origin.

NC Marketable Title Act

Provides that if a chain of title can be traced back for 30 years and no other claim has been recorded during that time, the title becomes a marketable title. Any conflicting claims predating the 30-year chain of title may be extinguished.

Title examination process.

Public records search (attorneys in NC). -Create "Chain of Title". -Create "Abstract of Title". -Summary of conveyances, encumbrances. -Certification that history is complete/accurate. -Attorney gives "Opinion of Title". -Thus the need for Title Insurances. -Owner vs. Lender Polices. -Lender's policy does not protect buyer's equity.

Eminent domain

The right of the government to acquire privately owned real estate for public use. CONDEMNATION is the process by which the gov exercises that right, by either judicial or admin proceedings. Must satisfy 3 conditions 1) Benefit the public, 2) Equitable compensation, and 3) Rights protected by due process of law.

Alienation

The transfer of title, the act of transferring property to another. Voluntary alienation is the voluntary transfer of title to real esate by gift or sale, using some form of deed.

Title

Title is ownership, or the right to ownership, of land and evidence of that ownership. Title has 2 functions: 1) it represents the bundle of legal rights the owner possesses in the real estate, and 2) it denotes the facts that, if proven, enable a person to recover or retain ownership or possession of a parcel of real estate.

Marketable title

Title must: - not have serious defects, nor rely on doubtful questions of law or fact to prove its validity - not expose the purchaser to litigation or threaten quiet enjoyment of property; and - convince a reasonably well-informed and prudent purchaser that the property could be sold or mortgaged at a later time.

Involuntary Alienation

Title to property transferred without owner's wishes or consent. Examples are government condemnation of land for public use or the sale of property to satisfy delinquent tax or mortgage liens.

Chain of Title

A record of property ownership, but it does not include liens and other encumbrances: - A gap in the chain or other dispute of ownership creates a cloud on the title. - A cloud on title is resolved by ACTION TO QUIET TITLE.

Constructive Notice

To serve as constructive notice, and with priority over subsequent documents, a written document is needed that: 1) affects an estate, right, title, or interest in land. 2) must be drafted and executed (signed). 3) is written according to state law (recording acts) 4) is recorded in the public records that are maintained by the designated official and held in the county in which the property is located.

Escheat

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

Title search

examination of public record. recommended to ensure getting marketable title. tries to establish chain of title. In NC only attorneys can give opinion of title. Real estate agents are prohibited from giving an opinion on condition of title.

Deed

A written instrument (must be in writing) by which an owner of real estate intentionally conveys right, title, or interest in the parcel of real estate to another. A deed is evidence of title. The owner is referred to as the grantor, and the person who receives the title is called the grantee. A deed is executed (signed) only by the grantor. The grantee does not usually sign the deed.

Excise Tax

All sellers of real property in NC must pay an excise tax that is based on the sales price of the property. $1 for every $500. Excemptions: transfer by government entity, transfer by will or interstate succession because of death, transfer by deed of gift when no consideration is paid, transfer by merger or consolidation, transfer by lease for a term of years, and transfer by instruments securing debt, such as a mortgage and/or deed of trust.