Unit 6 Transfer of Title

All of these are necessary to a valid deed EXCEPT A) recital of consideration. B) the grantee's signature. C) delivery. D) words of conveyance.

(B) The answer is the grantee's signature. The grantee does not need to sign the deed, because the grantee receives the property.

Trustee's deed

A deed executed by a trustee is a trustee's deed. It is used when a trustee conveys real estate held in the trust to anyone other than the trustor. 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.

Involuntary Alienation

Land may be acquired through the process of accretion or actually lost through erosion. Other acts of nature, such as earthquakes, hurricanes, sinkholes, and mudslides, may also change or destroy a landowner's property. Title to property may be transferred without the owner's consent by involuntary alienation.

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.

What are the two functions of a Title?

Title to real estate means the right to or ownership of the land; it represents the owner's bundle of legal rights. Title also serves as evidence of that ownership.

Reconveyance deed

A reconveyance deed is used by a trustee to return title to the trustor. For example, when a loan secured by a deed of trust has been fully paid, the beneficiary notifies the trustee. The trustee then conveys the property back 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.

Special Warranty Deed

A special warranty deed limits the grantor's defense of the title transferred by warranting that the grantor received title; and that the property was not encumbered during the time the grantor held title, except as otherwise noted in the deed.

Devise

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

Title to property may be transferred without the owner's consent by involuntary alienation. True False

True

What are the requirements of a valid deed generally must contain what elements?

- 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 to conveyance of full title - 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.

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.

intestate

When a person dies intestate (without a valid will), the title to the real estate passes to the heirs identified in the state's law of intestate succession. If no heirs can be identified or found, the state will acquire the property by the state's power of escheat.

Party Y receives a deed from party X. The granting clause of the deed states, "I hereby remise, release, alienate, and convey to Y the following real property." What type of deed has Y received? A) Special warranty B) Bargain and sale C) Quitclaim D) General warranty

(A) The answer is special warranty. The quoted granting clause does not use the word quitclaim but does use the word convey, so it is not a quitclaim deed. It does not use the words warrant generally, so it is not a general warranty deed, and it does not use the phrase bargain and sell. A special warranty deed uses such words as remise, alienate, and convey.

Title to real estate may be transferred during a person's lifetime by A) escheat. B) involuntary alienation. C) descent. D) devise.

(B) The answer is involuntary alienation. Transfer of title by devise (will), descent (death intestate), or escheat (for lack of a will and lack of heirs) all occur after death. Involuntary alienation, such as condemnation, foreclosure sale, or tax sale, can occur during a person's lifetime.

Transfer of property by foreclosure of a mortgage loan is A) illegal. B) involuntary transfer. C) voluntary transfer. D) probate.

(B) The answer is involuntary transfer. 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.

The grantor of property transferred by deed promises to compensate the grantee for any future loss sustained by a defect in the title to the property by A) the promissory note. B) the covenant of warranty forever. C) the covenant against future losses. D) the covenant of seisin.

(B) The answer is the covenant of warranty forever. With this covenant, the grantor promises to compensate the grantee for any loss sustained by the grantee if the title to the property fails at any time in the future.

The deed promising that the grantor holds title to the identified property and has not encumbered the property during the time it was held by the grantor is A) the general warranty deed. B) the special warranty deed. C) the quitclaim deed. D) the bargain and sale deed.

(B) The answer is the special warranty deed. The special warranty deed promises that the grantor will defend the title against the grantor's actions, but not those of earlier owners of the property.

Under state law, one-half of an intestate decedent's property goes to the decedent's spouse, one- fourth is divided equally among the decedent's children, and one-fourth goes to the state. If there is no spouse, the children divide three-fourths equally. A citizen of this state dies intestate, survived by an ex-spouse and seven adult children. If the estate is $865,550, how much will each child receive under state law? A) $61,825.25 B) $123,650.00 C) $92,737.50 D) $0

(C) The answer is $92,737.50. The ex-spouse gets nothing. The state gets one-fourth and the remaining three-fourths will be divided equally among the seven children: $865,550 ÷ 4 = $216,387.50 to the state. The remaining amount, $649,162.50, is divided seven ways, leaving $92,737.50 per child.

The primary heirs of the deceased are the surviving spouse and close blood relatives (such as children, parents, brothers, sisters, aunts, uncles, and, in some cases, first and second cousins) under A) common law. B) federal law. C) the state's real estate laws. D) a state's law of descent and distribution.

(D) The answer is a state's law of descent and distribution. The primary heirs of the deceased are the surviving spouse and close blood relatives (such as children, parents, brothers, sisters, aunts, uncles, and, in some cases, first and second cousins) identified under a state's law of descent and distribution.

For a deed to be recorded, MOST states require that it be A) certified. B) signed by the grantee. C) registered. D) acknowledged.

(D) The answer is acknowledged. Having the deed notarized or acknowledged shows that the grantor freely signed the document.

All of these are reasons for probate EXCEPT A) to identify which persons get any of the estate. B) to determine the exact assets of the deceased person. C) to confirm that the will is valid. D) to ensure that the heirs do not fight among themselves.

(D) The answer is to ensure that the heirs do not fight among themselves. Preventing fights among heirs is not the reason for probate.

Bargain and sale deed

A bargain and sale deed contains no express warranties against encumbrances, but it does imply that the grantor holds title and possession of the property. 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 grantee similar protection.

Exceptions and reservations (deed)

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.

Deed of trust

A deed of trust (or deed in trust in some states) 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.

Testate

A person who dies testate has prepared a will indicating how that person's real and personal property will be disposed of at the time of death. When a person dies intestate (without a valid will), real estate and personal property pass to the decedent's heirs according to the state's statute of descent and distribution. In effect, the state makes a will for an intestate decedent.

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.

What are the Legal requirements for making a will?

A testator must have legal capacity to make a will. There are no rigid tests to determine legal capacity. Usually, a person must be of legal age and of sound mind. The drawing of a will must be a voluntary act, free of any undue influence by other people. 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. Some states still recognize oral (nuncupative) wills or entirely handwritten (holographic) wills. Other states do not permit real property to be conveyed by anything other than a formally witnessed, written will. 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.

Delivery and acceptance (deed)

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.

Will

A written document, properly witnessed, providing for the transfer of title to property owned by the deceased, called the testator.

Adverse possession

Adverse possession is another means of involuntary transfer. 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.

Acknowledgment (deed)

An acknowledgment is a formal declaration under oath that the person who signs a written document does so voluntarily and that the signature is genuine. The declaration is made before a registered notary public or an authorized public officer, such as a judge, justice of the peace, or some other person as prescribed by state law. An acknowledgment usually states that the person signing the deed or other document is known to the officer or has produced sufficient identification to prevent a forgery. After verifying the individual's identity, the notary public will also sign and stamp the document, which allows it to be recorded. 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.

Deed executed pursuant to a 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.

In one state, the transfer tax is $0.80 per $500 or fraction thereof. There is no tax charged on the first $500 of the price. What tax must the seller pay if the property sells for $329,650? A) $528.00 B) $526.40 C) $525.60 D) $527.20

The answer is $527.20. The seller must pay $527.20: $329,650 - the $500 = $329,150 $329,150 ÷ $500 = 658.3, rounded up to 659 659 × $0.80 = $527.20

Which type of deed is used by a grantor whose interest in the real estate may be unknown? A) Quitclaim deed B) Bargain-and-sale deed C) General warranty deed D) Special warranty deed

The answer is a quitclaim deed. A quitclaim deed transfers whatever interest the grantor may have. If the grantor has no interest, the grantee will acquire nothing and have no right of warranty claim against the grantor.

A homeowner signed a deed transferring ownership of the home to a friend. To provide evidence that the owner's signature was genuine, the owner executed a declaration before a notary. This declaration is known as A) an affidavit. B) an affirmation. C) an estoppel. D) an acknowledgment.

The answer is an acknowledgment. An acknowledgment is designed to prevent forged and fraudulently induced documents from taking effect.

Under the covenant of quiet enjoyment, a grantor A) ensures that the title will be good against the title claims of third parties. B) warrants that he or she is the owner and has the right to convey title to the property. C) promises to obtain and deliver any instrument needed to make the title good. D) warrants that the property is free from liens and encumbrances.

The answer is ensures that the title will be good against the title claims of third parties. Quiet enjoyment means freedom from claims of third parties—persons other than grantor and grantee.

When a person dies testate, title to real property transfers to A) the devisee. B) the testator. C) the deceased person's heirs. D) the descendant

The answer is the devisee. A person who dies testate has died with a valid will. The gift of real property by will is known as a devise, and a person who receives real property by will is known as a devisee.

All of the following are true of the holder of a fee simple absolute estate EXCEPT A) the holder has maximum control over the property. B) the estate terminates upon death. C) the holder has the maximum estate available in land. D) the holder can transfer rights to others.

The answer is the estate terminates upon death. Fee simple absolute estates potentially last forever.

A deed states that the grantors are conveying all their rights and interests to the grantees to have and to hold. This is communicated in A) the restriction clause. B) the covenant of seisin. C) the habendum clause. D) the acknowledgment clause.

The answer is the habendum clause. The habendum clause defines or explains the ownership to be enjoyed by the grantee, and its provisions must agree with those stated in the granting clause. The habendum clause begins with the words to have and to hold.

In a special warranty deed, the grantor promises A) to furnish title insurance to protect the grantee. B) to defend the title against encumbrances before or during the grantor's period of ownership. C) to defend the title against any encumbrances during the grantor's period of ownership. D) nothing.

The answer is to defend the title against any encumbrances during the grantor's period of ownership. A special warranty deed promises that while the seller owned the property, the seller did not cloud the title. The seller only defends against clouds on title that may have occurred during the seller's ownership period.

Signature of grantor (deed)

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. The person with power of attorney does not have to be an attorney-at-law, but could be. Usually, the power of attorney must be recorded in the county where the property is located.

Legal description of real estate (deed)

To conform to the intent of the grantor, a deed must contain an accurate legal description of the real estate conveyed. Land is considered adequately described if a professional surveyor can locate the property and accurately mark its boundaries using the description.

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.

title

(1) The right to ownership or the ownership of land. (2) The evidence of ownership of land.

The person who makes a will is called a testator. True False

True

Eminent domain and escheat are two examples of A) involuntary alienation. B) voluntary alienation. C) adverse possession. D) transfers of title by descent.

(A) The answer is involuntary alienation. The right of eminent domain allows a government entity to compel the transfer of a property to that entity for a price set by court process—condemnation. This transfer of title (alienation) is forced and so is involuntary. When a person dies without a will (intestate) and without heirs, the property passes (escheats) to the state. This process was neither planned nor initiated by the owner before death and so is classified as involuntary.

A form authorizing one person to execute documents for another is called A) a power to represent. B) a power of attorney. C) a release deed. D) a quitclaim deed.

(B) The answer is a power of attorney. That document is a power of attorney; the person named in it is an attorney-in-fact. Deeds do not authorize one person to act for another.

Although state laws governing a corporation's right to convey real estate vary, what are the two basic rules that must be followed?

- 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.

What are the most common deeds?

- 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

A title is not considered transferred until the deed is actually delivered to and accepted by the grantee. The grantor must deliver the deed to the grantee personally. True False

False The answer is false. To transfer title, the deed must be delivered to and accepted by the grantee, but the grantor need not do so personally.

Usually the possession by the claimant must have what following characteristics? which can be remembered as ONCHA. The property use must be

ONCHA - open—obvious to anyone who looks, - notorious—known by others, - continuous—uninterrupted, - hostile—without the true owner's consent, and - adverse—against the true owner's right of possession.

Probate

Probate is a formal judicial process. 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 owner who transfers title is called the grantor, and the person who acquires title is called the grantee. True False

True

deed

a document by which an owner of real estate conveys the right, title, or interest owned in the parcel of real estate to someone else. The statute of frauds, found in all states, requires that all deeds be in writing. The owner who transfers the property is referred to as the grantor, and the person who receives the property is called the grantee. A deed is executed (signed) by the grantor. The terms are easier to remember if you keep in mind that the grantor is the property owner. Remembering Legal Terminology: "OR" vs. "EE" lists a number of terms that appear throughout the text that can be remembered in the same way.

Voluntary alienation

a 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. (As will be discussed later, the actions of a property owner can also determine the disposition of the property on the owner's death.)

An oral will is called a holographic will. True False

false An oral will, which must be permitted by the state, is called a nuncupative will. A holographic will, which also must be permitted by the state, is one that is entirely handwritten.

In order to establish title by adverse possession, there must be proof of an exclusive, nonpermissive use that is ONCHA—open, notorious, continuous, hostile, and adverse to the true owner's interest—for the statutorily prescribed period. True False

true