Transferring & Recording Title to Real Estate

Probate

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. 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.

Deed of conveyance

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

Transfer by will

A private grant that occurs when the owner dies

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. 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.

Title search

A title abstractor or title company analyst conducts the search of public records, called a title search, needed to produce an abstract. Insurers and lenders generally require the search to identify title defects and ascertain the current status of encumbrances.

Color of title

Color of title results when a grantee has obtained defective title, or received title by defective means, but occupies the property as if he or she were the legal owner. A court may hold that a claim of right or a claim of colored title is a valid reason for the possession.

Conveyance clauses

Conveyance clauses describe the details of the transfer. The principal conveyance clauses are: Granting clause, or premises clause the only required clause; contains the conveyance intentions; names the parties; describes the property; indicates nominal consideration Habendum clause describes the type of estate being conveyed (fee simple, life, etc.) Reddendum clause, or reserving clause recites restrictions and limitations to the estate being conveyed, e.g., deed restrictions, liens, easements, encroachments, etc. Tenendum clause identifies property being conveyed in addition to land

Covenant, or warrant, clauses

Covenant clauses present the grantor's assurances to the grantee. A deed of conveyance usually contains one or more of the following covenants, depending on the type of deed. Warrant of seizen assures that the grantor owns the estate to be conveyed, and has the right to do so Warrant of quiet enjoyment assures that the grantee will not be disturbed by third party title disputes Warrant of further assurance assures that the grantor will assist in clearing any title problems discovered later 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 encumbrances assures that there are no encumbrances on the property except those expressly named 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

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. Grantors may give power of attorney to other parties, authorizing them to execute deeds on their behalf. The power of attorney authorization should be recorded to ensure a valid conveyance. • be acknowledged The grantor must declare before a notary or other authorized person that the grantor's identity and signature are genuine, and that the deed execution was a free, voluntary act. The grantor then receives a certificate of acknowledgment signed by the notary. Some states require acknowledgment to complete a valid conveyance. Most states require it before they will record the deed. A deed without an acknowledgement, therefore, tends to endanger one's claim to a property.

Depending on state law, a deed must meet the following requirements for validity. The deed must:

Quiet title suit

If a party responsible for encumbering title refuses to quitclaim the interest, the owner may file aquiet 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. The overall quit claim covenant is: "I may or may not own, and I won't defend."

escheats

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

Torrens certificate

If available, the Torrens certificate is the best evidence, for the reasons given earlier-- it is not merely a record, but is the title itself.

Clouded title

If there is a missing link in the chronology of owners, or if there was a defective conveyance, the chain is said to be broken, resulting in a clouded title to the property. To remove the cloud, an owner may need to initiate a suit to quiet title, which clears the title record of any unrecorded claims.

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.

Actual notice

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

Torrens system

In states that use the Torrens system, 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.

Title insurance

In the absence of Torrens registration, a title insurance policy is commonly accepted as the best evidence of marketable title. A title insurance policy indemnifies the policy holder against losses arising from defects in the insured title.

Involuntary alienation

Involuntary alienation is a transfer of title to real property without the owner's consent. Involuntary alienation occurs primarily by the processes of descent and distribution, escheat, foreclosure, eminent domain, adverse possession, and estoppel.

General warranty deed- 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."

Recording

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.

Torrens system

The Torrens system differs from other title recording systems in that title passes only when the conveyance has been duly registered on the title certificate itself. To demonstrate marketable title to a buyer, a seller must show that the title is free of • doubts about the identity of the current owner • defects, such as an erroneous legal description • claims that could affect value • undisclosed or unacceptable encumbrances The four principal forms of evidence the owner can use to support these assurances are: • a Torrens certificate • a title insurance policy • an attorney's opinion of the title abstract • a title certificate

Constructive notice

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

• be competent at the time of delivery • intend to deliver the deed, beyond the act of making physical delivery Validity of the grantee's acceptance requires only that the grantee have physical possession of the deed or record the deed.

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

Voluntary alienation

Voluntary alienation is an unforced transfer of title by sale or gift from an owner to another party. If the transferor is a government entity and the recipient is a private party, the conveyance is a public grant. If the transferor is a private party, the conveyance is a private grant.

Binder

commitment to insure

eminent domain

domainVarious 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

Marketable title

free of undesirable encumbrances

Equitable title

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.

Claim of right

is based on the adverse possessor's occupying and maintaining the property as if he or she were the legal owner

Last will and testament

legal instrument for the voluntary transfer of real and personal property after the owner's death. It describes how the maker of the will, called the testator or devisor, wants the property distributed.. A beneficiary of a will is called an heir or devisee. The property transferred by the will is the devise.

Adverse posession

may allow a real property owner to lose legal title to an adverse possessor. An adverse possessor is someone who enters, occupies, and uses another's property without the knowledge or consent of the owner, or with the knowledge of an owner who fails to take any action over a statutory period of time. To claim legal title, the adverse possessor must: • be able to show a claim of right or color of title as reason for the possession • have notorious possession, which is possession without concealment • maintain a consistent claim of hostile possession, which is a claim to ownership and possession regardless of the owner's claims or consent • occupy the property continuously for a statutory period of time • in some states, pay taxes

Estoppel

prevents a person from claiming a right or interest that is inconsistent with the person's previous statements or acts. As a basis for involuntary alienation, the doctrine of estoppel can prevent an owner from re-claiming a property that was transferred under false pretenses.

Title records

public records contain a history of every parcel of real estate in the country, including names of previous owners, liens, easements, and other encumbrances that have been recorded.

Legal title

someone who possesses all ownership interests

Alienation

transfer or title to real estate

Sherriff's deed

used to convey foreclosed property sold at public auction

Tax deed

used to convey property sold at a tax sale 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. Exemptions from transfer tax include: • 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

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

Deed in trust

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

Conveyance

when the transfer of title to real estate uses a written instrument

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