Course Notes Flashcards
seller’s loan: debit or credit?
debit to seller
seller’s interest: debit or credit?
debit to seller
seller’s prepayment: debit or credit?
debit to seller
commission: debit or credit?
debit to seller
earnest money: debit or credit?
credit to buyer
buyer’s loan, new: debit or credit?
credit to buyer
buyer’s interest, new loan: debit or credit?
debit to buyer
buyer’s points/discount points, loan origination: debit or credit?
debit to buyer
taxes not paid: debit or credit?
credit buyer, debit seller
chattels: debit or credit?
debit buyer, credit seller
discount points
“Points” are amounts charged by a lender in the origination of a loan that is above and beyond the loan’s interest rate.
purpose of discount points
A discount point charge enables the lender to adjust the effective interest rate of a loan to reflect market conditions.Also, the charge is to enable the borrower to have a lower interest rate. This is achieved by ‘prepaying’ interest via a points charge at closing.
1 discount point
1 point = 1%, or one hundredth (.01) of the loan amount. Therefore, if a lender charges 2 points on a loan of $400,000, the points charge will be 2% of the loan, or $8,000.
Amortized loans
loans with fixed payments and a declining principal balance. At the end of the loan period, the borrower has paid off both principal and interest.
The Points-to-Interest Rate Ratio
As a rule of thumb, for a 30 year loan: 1 discount point paid (1%) = 1/8% increase in interest
Why charge points?
Points may be charged by the lender to compensate for any interest difference in yield required by the lender for the loan and the interest paid by the borrower. For example, if the lender has to have a yield of 7.5%, and if a borrower was only paying 7.25% interest, discount points would have to be paid to bring the yield up to 7.5% for the lender to make the loan.
Calculating Seller’s Net
Price - commission = Net + Mortgage balance + closing costs
calulating interest, principle and rate
Interest = principle x rate
loan-to-value ratio
LTV ratio = (Loan amount ÷ Value). Assume a property has a $150,000 and a loan is placed on it for $90,000. What is the LTV ratio? LTV = $90,000 ÷ $150,000 = 60%
Land plus appurtenances
rights, privileges, and improvements that belong to, and pass with, the transfer of property
Man-made appurtenances
like houses, fences, barns, swimming pools; in other words, items that are “added” to the real estate.
Natural appurtenances:
are things like trees, creeks, and streams.
Air rights, gas rights, solar rights, light and sound rights, mineral rights, and surface rights
air, surface and subsurface rights can each be sold or not sold separately. (“I will sell you the ‘mineral rights’ to my land”)
Water rights
littoral, riparian and prior appropriation
Livery of Seisin
When you sell the entire bundle of rights
Freehold Estates
means, “I own the property,” it is what we think of as “Ownership.” There is no definite ending date. The estate lasts at least a lifetime, because the property can be willed to a person’s heirs, and can be enjoyed without the interference of others.
devise
means to will
to license
means to allow others to use
5 economic characteristics of land
DEMAND - the more demand there is for a particular property the more valuable it is to consumers looking for real estate.
UTILITY OR USEFULNESS - a three bedroom house is more useful to more consumers than a two bedroom or a one bedroom.
SCARCITY - if few properties in a particular area go on the market, when one does, it sells quickly.
TRANSFERABILITY - when loans are available and rates are low real estate is readily transferable from seller to buyer.
SITUS - the three most important economic characteristics of real estate are Location, Location, and Location.
3 physical characteristics of land
IMMOBILITY - real estate is permanent
INDESTRUCTIBLE - land is permanent
NONHOMOGENEOUS (Uniqueness) - each parcel of land has its own unique characteristics (there are no two properties that are the same)
BECAUSE NO TWO PROPERTIES ARE THE SAME, A BUYER CAN SUE A SELLER OR A SELLER CAN SUE A BUYER FOR “SPECIFIC PERFORMANCE” IF ONE OF THEM REFUSES TO CLOSE.
fixture
something which once was personal, but has been installed – therefore, it becomes real property.
affixed
verb: personal property becomes real property
Tests for Determining if something is a FIXTURE:
M.A.I.D.
Method of Annexation - how the item is attached to the property (a window air -conditioner (personal) vs. a central air conditioning unit (appurtenance).
Adaptability - a microwave oven that is “built in” vs. a microwave that simply sits on a kitchen counter.
Intent of the parties - when an owner installs a ceiling fan it is assumed that it is appurtenant to the property and transfers to the buyer. It is important that real estate agents write into the offer (made by the buyer), items that may lead to misunderstandings.
Damage - if, by agreement, a fixture is to be removed, the damage caused by removal must be repaired.
Emblements or fructus industriales
Annual crops such as wheat, corn, and vegetables are considered personal property. As long as the annual crop is growing it will be transferred as part of the real estate, unless a special provision is included in the sale contract.
Fructus naturales
Perennial trees, perennial bushes, and grasses that do not require annual cultivation are considered real property. If a tree is cut down and sold as firewood, the firewood becomes personal property.
ANNEXATION
changes personal property to real property.
SEVERANCE
changes real property to personal property.
trade fixture
The property of a tenant that is installed, and is necessary for their trade or business.
A trade fixture is personal property, and can be removed by the tenant any time before the end of the lease term.
If a trade fixture is not removed before the expiration of the lease, the trade fixture becomes the property of the landlord at the end of the lease term.
four categories of GOVERNMENT INTERFERENCE IN PRIVATE OWNERSHIP
“PETE”, (Police Power, Eminent Domain, Taxation, and Escheat)
Police Power
The right of the government to enact laws and enforce them.
Zoning laws regulate:
The use of the land
Lot sizes
Types of structures permitted
Building heights
Setbacks (how far back from the street an improvement can be built)
Density (the ratio of land area to improved area)
Types of animals that can or cannot be kept on a property (no pet cougars, etc…)
Spot zoning
occurs when a small area of land or section in an existing neighborhood is singled out and zoned differently from that of neighboring properties. For example, a park, school, or small grocery store might be permitted in a residential area if it serves a useful purpose to the neighborhood residents.
CONDEMNATION
the process by which property is acquired through Eminent Domain. This takes place when the owner and the government cannot negotiate a satisfactory voluntary acquisition of the property. This is called a “Taking.”
Special Assessment
a tax or levy imposed against only those specific parcels of realty that will benefit from a proposed public improvement, as opposed to a general tax on the entire community.
*For example, if sidewalks were added in a neighborhood to better serve the community, the government would place a Special Assessment on each home owner fronting the sidewalk to pay for it.
Escheat
property cannot be without an owner. Therefore, when an owner dies without a WILL and without HEIRS, then the property reverts back to the state. Similarly, if the property is abandoned (through lack of paying taxes), the ownership of the property goes to the state.
Leasehold Estates
means, “I rent the property,” it is what we think of as “Renting” or “Leasing.” There is usually a definite ending date. Sometimes, these are referred to as “Less than Freehold Estates.”
Fee Simple (Fee Simple Absolute)
Freehold estate: Owns the bundle of rights Highest degree of ownership Has unlimited duration Is inheritable Is subject to only the government powers
Fee Simple Defeasible
Freehold estate: based on an occurrence or a non-occurrence of a specified event.
Fee simple conditional
An estate that dictates, “on the condition that…”
An estate that provides the “right to re-enter”
Example: “I will sell my property to you with the condition that alcohol is never served on the premises. If you have a wine and cheese party, then I have the right to take back the property.”
Estate in Reversion
the grantor separates his/her fee simple estate into two parts which are:
A life estate which is deeded to a life tenant.
Reversion estate which is retained by the grantor.
Rights of life tenant
Possesses an incomplete bundle of rights for his/her lifetime. Once the life tenant dies, the life estate portion reverts back to the grantor, who once again has the complete bundle of rights. Grantor -> Life Tenant -> Death of Life Tenant -> Grantor
Estate in remainder
The grantor separates his/her bundle of rights into two parts: Life estate is deeded to a life tenant.
Remainder estate is given to a third party who is known as the remainderman (once the life tenant dies, the remainderman owns the property fee simple, since he now possesses the complete bundle of rights).
Grantor -> Life Tenant -> Death of Life Tenant -> Remainderman
The rights of a life tenant:
Iincomplete bundle of rights: can sell, lease or demise (lease), encumber which means to borrow against, use, enjoy, exclude meaning no trespassing, occupy, cultivate, exchange to defer capital gains, explore, license (give others permission to use, dedicate for streets, schools, and parks, etc., share, mortgage, trade.
Remember, if a life tenant does any of the above the person or lender, or any other entity who accepts the use of the property, in any way, only owns or has the right to use it until the death of the life tenant. Because a life tenant only owns an incomplete bundle of rights he/she cannot:
Will the property to anyone else.
Waste or destroy the property.
Pur Autre Vie
This is a life estate, based on the life of another, rather than the life tenant. The life tenant can have the incomplete bundle of rights until that third party dies. A pur autre vie life estate can be either an estate in reversion or an estate in remainder.
Involuntary Life Estates
Legal Life Estates, also called marital rights. It is not possible to sell the property without the consent of the partner, nor own property in one name only
Dower
a wife’s interest in the husband’s property
Curtesy
a husband’s interest in a wife’s property
Homestead
protection against unsecured debts for the party who did not sign for the loan
A valid lease must contain:
REVERSIONARY RIGHT OR INTEREST by the LESSOR (OWNER)
Estate for Years
Has a definite beginning and ending date.
It is not necessary to give notice to the landlord to terminate an estate for years.
Renewal is NOT automatic, when this type of lease is over, it’s over.
Remember this type of lease can be for any amount of time.
Estate from Period to Period
Also known as periodic tenancy, or a month-to-month lease.
Proper notice is required to terminate (30 days - 60 days or whatever is agreed to in the lease).
No definite ending date (this type of lease renews itself for whatever period of time that was called for in the original lease or whatever is agreed upon in the actual lease).
Most apartment leases are estates from period to period if the tenant is required to give notice to terminate.
Estate at Will
Landlord lets you stay without a lease.
Notice can be given by either party without warning.
Death of either party immediately terminates an estate at will.
Estate at Sufferance
Tenant stays past the term of his lease. This tenant is known as a:
Holdover tenant because he/she are unlawfully in possession of the property.
The landlord must evict tenant through the courts. Cannot lock the tenant out, turn off utilities, or forcibly remove the tenant.
Actual Eviction:
The landlord’s remedy to regain possession of property.
Constructive Eviction:
The tenant’s remedy if the property is not habitable. The tenant must vacate the property, send notice to the landlord telling him of the problem and put the rent money in escrow until the issue can be resolved.
LESSOR
landlord
Lessee
tenant
Gross Lease, who pays?
Apartment. Lessee pays: flat fee. Lessor pays:all expenses
Net Lease, who pays?
Commercial. Lessee pays: flat fee and a % of expenses. Lessor pays: balance of expenses
Percentage Lease, who pays?
Shopping mall. Lessee pays: flat fee and a % of gross sales. Lessor pays: all expenses
Ground lease
long term lease, usually 99 years, tenant may build on a property with a ground lease, but the property is still the landlord’s.
Index lease
lease is based on some type of index such as Cost of Living etc. Usually adjusts upward.
Appraisal lease
a lease which states a date in the future for a new appraisal. If the appraisal is higher than last appraisal, the rent will go up accordingly.
Graduated lease
cost goes up at regular intervals.
Net lease
the tenant has agreed to pay ownership expenses, usually utilities, property taxes and special assessments.
Net-Net lease
the tenant pays for the insurance as well.
Net-Net-Net lease
the tenant also pays for some agreed upon items of repair and maintenance
Escalator Clause
a clause in a lease in which the parties agree to an adjustment of rent based on set increases in taxes, insurance, maintenance and other operating costs.
Non-disturbance Clause
A type of clause in a mortgage contract. The nondisturbance clause ensures that the rental agreement between the tenant and the landlord will continue under any circumstances.
Economic Rent
currently referred to as MARKET RENT, it is the rental income that real estate can command in an open, competitive market at any given time, in contrast with contract rent, or the income actually received under a lease agreement.
Ways to Take Title
The grantor (seller) decides what type of estate is transferred, (e.g. fee simple estates, life estates, etc.) However, it is the grantee (buyer) who decides how to take title to an estate.
Severalty
If ONE PERSON takes title to real estate, he or she takes title in Severalty.
The root of this word is to SEVER which means to “cut off” everyone else’s interests. This is sometimes referred to as “sole ownership” or an “estate in severalty.” Corporations always take title to real estate in this manner (in Severalty).
Tenants in Common
Individual interests in group ownership
What kind of co-ownership? Interests MAY be unequal or equal. One person can own a larger share of the property than another.
Tenants in Common
Undivided interest in the property. (Can’t divide up the house or the property.) All owners have an interest (based on percentage of ownership) in the whole property.
Tenants in Common
What kind of co-ownership? CAN sell one’s interest WITHOUT getting approval of other owners. Do not need the permission of other owners to sell an individual’s interest in a property.
Tenants in Common
What kind of co-ownership? Inheritable - passes to heirs: not other partner.
Tenants in Common
Partition Law Suit
If other share holders will not buy the interests of a share holder who wants to sell out, and no-one can be found to buy the shares, an individual can request that the courts sell either his/her shares (seek an equitable distribution) or the whole property.
Joint Tenancy
Unity of Ownership
In order to have a joint tenancy and the right of survivorship the following four unities must take place
TIME - all owners must take title at the same time.
TITLE - one deed transferred property from the grantor (seller) to the grantee (buyer). Remember that only the Grantor (seller) signs a deed to transfer property.
INTEREST each must have equal interest. There cannot be unequal interests in a Joint Tenancy.
POSSESSION undivided interest in the whole property as in Tenants in Common. If you see a test question about this issue, it is something that Tenants in Common and Joint Tenants have in common.
What kind of co-ownership? Creates the right of survivorship which means that when one owner dies, his/her interest passes to the other joint tenants rather than his/her heirs.
Joint Tenancy
What kind of co-ownership? Can be created only by grant or purchase (by a deed of conveyance) or by devise (will) it cannot be created by operation of law.
Joint Tenancy. For example, if you wanted to will real estate to your children as Joint Tenants you would place in your will something like the following: “To Jane and Bill Smith, and to the survivor of them, and his or her heirs and assigns as Joint Tenants, with rights of survivorship, and not as tenants in common.”
How can a joint tenancy be terminated?
A joint tenancy is terminated when any of the four unities are broken.
One sells his/her interest in the property: If there are three joint tenants and one sells his interest to a fourth party, this fourth party becomes a tenant in common with the remaining two joint tenants.
Partition Law Suit: As stated above under Tenants in Common
Bankruptcy: Of any one of the Joint Tenants.
Foreclosure: Of the property.
Tenancy By the Entireties
Essentially this is Joint Tenancy plus marriage! Owners must be husband and wife Right of Survivorship Equal Undivided Interest Inheritable
How can Tenancy by the Entirety be terminated?
Death of either spouse - survivor now owns the property
Divorce - parties become tenants in common
Mutual agreement - agree to sell the property
Foreclosure
No Right of Partition - cannot sell the property without your spouse
Can a married couple take title any other way than Tenancy by the Entireties?
Yes, remember that married couples may for personal reasons take title as Tenants in Common, or as Joint Tenants.
Community Property
Another form of ownership in some states for married people. Laws have Spanish origin and are therefore more prevalent in the Southwestern United States. In states which recognize community property laws (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), there are two types of property:
Community property is anything which was acquired during the marriage or commingling of the properties.
Separate property is anything that either spouse brought to the marriage, or anything that was acquired before the marriage, or acquired by gift or inheritance.
Straw man
One who purchases property for another so as to conceal the identity of the real purchaser; a dummy purchaser; a nominee, a front.
Encumbrance
An encumbrance is anything that burdens or limits your title to a property. Or, you may think of it as a right someone else has in your property.
The following are examples of encumbrances:
Liens
Easements
Encroachments
Deed Restrictions
Licenses
lien
a charge against the property that provides security for a debt, usually money.
Specific liens
iens applied to a specific piece of property and affect only that piece of property. (Example: a property tax lien).
General liens
liens against the person and all assets (all real and personal property) as a result of a lawsuit when the court awards a judgment.
Mechanic’s Lien
Filed when a workman does repair or construction work on your home.
Also filed when a lumberyard or supplier delivers construction materials to your home.
Are considered specific liens & involuntary And they are statutory, meaning they are created by state and/or local rules for enforcement.
Mortgage Lien
a bank loan you take out to buy the property. Voluntary & equitable
Income Tax Lien
when the government places a charge on the property since you did not pay income tax. Involuntary & statutory.
Judgment Lien
a loss in a lawsuit resulting in the charges being brought against everything you own. Involuntary & equitable.
Voluntary Lien
a mortgage lien. All others are involuntary.
Equitable Liens
liens arising out of a written contract that shows an intention of the parties to charge some particular property as security for a debt or obligation. Example: a mortgage lien or a judgment; all others are statutory liens (provided for under state law).
To enforce a mechanic’s or materialman’s lien, the lien:
Must be recorded only for the amount charged for the work completed.
Must be filed within a specific time period as determined by state law.
Must be on improved property only (land can be improved).
Anyone can file if they have supplied materials or worked on the property including surveyors, appraisers, graders, lumberyards, carpenters, etc.
Writ of Attachment
court retains custody of the property until suit is decided; prohibits the property from being sold.
Lis Pendens
(means “pending litigation”) - recorded at courthouse; renders a property unmarketable.
Judgment
court decision on the rights and claims of the parties in a suit.
Writ of Execution
court order authorizing a sheriff or other officer of the court to sell the property to satisfy a judgment.
Priority of Liens in Foreclosure (Who gets paid first)
Cost of the Sale
Property Taxes - This lien does not have to be recorded to be valid and/or collectable.
General (Ad Valorem Taxes)
Special Assessments
First Mortgage or Deed of Trust
All other mortgages and other types of liens in ORDER OF PRIORITY, or the date and time of recording, including IRS, mechanics, materialman etc.
deficiency judgment
Failure to completely pay off the loan on the courthouse steps will cause the debt holder to file a deficiency judgment against the borrower and then the total assets of the borrower are available for collection by the debt holder (such as wages, cars, boats, campers as well as the proceeds from the sold house).
Easements
give someone else the right to USE a part of your property while you still retain the ownership rights. An easement does not give any possessory rights, just the right of ingress (enter) and egress (exit). For that reason, an easement is said to be an interest in property but not an estate.
appurtenant easement
the right to use the land of another (adjoining or nearby land usually). The easement right transfers with the dominant tenement (property using the easement). It also remains if the servient tenement (property being used) is transferred to another owner.
easement in gross
benefits an individual and is not tied to the land. Easements in gross are typically utility easements, although some are personal easements in gross. It is a personal right (not merely permission) to use someone’s land and does not have a dominant estate. An easement in gross does not transfer when the property transfers, and the individual with the easement cannot transfer the easement to another party.
Implication
n easement arising by implication from the acts or conduct of the parties. For example, a person acquiring mineral rights on a property also acquires an implied easement to enter the property for the purposes of removing the minerals.
Reservation
The creation, on behalf of the grantor, of a new right issuing from what was granted. A reservation thus is something that did not exist as an independent right before the conveyance. For example, I convey to you a 5 acre parcel but I reserve a life estate until I die. I would have reserved easement rights of egress and ingress.
Necessity
An easement created by a court of law in cases of justice and if necessity dictates it, especially in a classic landlocked situation.
Condemnation
A judicial or administrative proceeding to exercise the power of eminent domain, that is, the power of the government (federal, state, local, improvement district) to take private property for public use. The agency taking the property is the condemner, and the person whose property is being taken is the condemnee. In the taking of private property for public use, a fee simple estate or any lesser right, such as an easement, may be acquired. A common example of condemnation is the taking of an owner’s access to a street entrance when the county builds a highway or dedicates the area for county use.
Expressed
An express contract (easement) exists when the parties state the terms and show their intentions in words. An express contract can be either oral or written. Like all real estate contracts, express easements should be reduced to writing to be enforceable in a court of law. (Statute of Frauds)
Prescription
an easement by prescription is created when someone uses the property of another repeatedly over a period of time without interruption and without permission of the owner. It is similar to taking ownership by adverse possession, except that an easement is created rather than ownership.
Dedication
A developer “dedicates” an easement for use by all area homeowners (i.e., access to a lake or a walking path).
Four Types of Easements
Appurtenant
In Gross
Prescription
Necessity
Dominant party
who is the person benefited by the easement.
Servient party
who is the person who is burdened by the easement.
Easements in Gross
NOT tied to any land, but instead owned by a person or company. For that reason they are considered a mere personal interest. Gross easements are usually commercial in nature and can be sold to others.
Easements by Necessity (Operation of Law)
Easements by necessity are also sometimes referred to as an “Easement by implication” and are created by a court of law.
An easement by necessity would be granted to a landlocked property. A property can be landlocked but there must be a way to get out!
An example of an easement by implication would be when someone sells land, but retains the mineral rights. There is an implication that the seller will have the right to use the land to obtain the minerals.
Easement By Prescription
Easement by prescription is when the claimant has used the land for the time period set by law. If this time required has been fulfilled, the claimant can claim the right to use the land foreve: Possession - an individual must be in possession of the property for the prescribed period of time required by the state where the property is located.
Open - the individual must make “open use” that is, “He/she must wave their flag to let the whole world know that they are in possession of the property.”
Actual - Must actually be in possession of the property for the prescribed period of time.
Continuous - Once again for the prescribed period of time required by law.
Hostile - Possession is both exclusive and hostile to the title of the owner, without the permission of the owner of the property, and evidencing an intention to maintain the claim of ownership against all who may contest it.
How can an Easement be terminated?
Purpose no longer exists Abandonment Merger of the Parties Destruction Quit Claim Deed (explained later in the course) Excessive use
encroachment
an unauthorized intrusion of a building or other improvement onto another person’s land.
Deed Restrictions/Restrictive Covenants
A restriction is a use encumbrance. Restrictive covenant limits the use of a property. Usually placed by the grantor in a deed, thereby binding future owners.
Limiting restrictions:
State things you can never do. (No fences, no dog runs, etc.).
Affirmative restrictions
State things you must abide by. (Set back requirements, minimum square footage, front of house must be brick, etc.) Who can enforce these restrictions? Enforcement of restrictions is always done by a court of law.
Unenforceable Restrictions
Any restriction that violates public policy (State or Federal law) or is discriminatory is not enforceable. Other unenforceable restrictions include:
Any restriction that limits your right to sell at a future date. For example, if the following statement was written in a deed it would be an illegal restriction that would violate the Federal Fair Housing Laws. “The owner of this property you can only sell it in the future to his/her relatives”.
license
It is not assignable.
The person who gave the license has the right to revoke it at any time.
Death terminates the license.
Riparian Rights
Along a NAVIGABLE river, (commercial traffic) one owns to the water’s edge.
Along a NON-NAVIGABLE stream one owns the land to the center of the stream. (The government owns the water.)
Doctrine of Prior Appropriation
A state’s government can give permission to a non-adjacent land owner for crop IRRIGATION and other uses.
Littoral Rights
Seashore and beaches.
Along large NAVIGABLE lakes and oceans one owns to the average high water mark.
Accretion
the increase of land created by deposits of soil by the natural action of the water.
Erosion
The decrease of land by the gradual wearing away that is caused by flowing water.
Avulsion:
Is the “sudden” loss of land by an act of nature (e.g. the ocean washes away the water front during a typhoon).
Reliction:
Increase in land due to the receding of water from the shore.
Alluvial plain or alluvion:
An Alluvial plain is a delta area where soil deposits from a river; Alluvion is the accumulation of soil, rock and other matter from the movement of water.
Horizontal Property Act
describes condo air space ownership.
Time Sharing
“Interval Ownership” is especially popular for vacation resort areas. A buyer purchases ownership of a property for a specific period of time each year. Time share “ownership” is fee simple ownership. Time share “use” consists of the right to occupy and use the facilities for a certain number of years. When the time is up the owner has the right to terminate the use. Time share usage is not a fee simple estate.
syndicate
when many investors bring in additional investors as a means of raising money and spreading the risk of the investment.
partnership
a business organization where two or more persons carry on a business as co-owners and share in the business’s profits and losses.
General Partnership
A form of business organization in which two or more co-owners carry on a business for profit.
All general partners participate in the:
Management of the partnership.
Full liability for the debts, any losses, and obligations of the partnership.
Limited Partnership
Must have at least one
General Partner - The remaining partners are known as “silent partners.”
Limited partners are only investors, and have no say in the organization and direction of the operation. A limited partner shares in the profits and compensates the general partner for his or her efforts out of such profits. A limited partner cannot be held liable for any debts beyond their investment.
Corporations always own property in:
Severalty
A Sub-Chapter S corporation is a business organization that does business as a corporation, but is treated as a partnership for tax purposes.
Voluntary Alienation
another term for “transfer or convey.” It is the “right and evidence of ownership of the land.”
deed
a document that transfers ownership from grantor to grantee.
A deed is evidence of title just as a marriage license is evidence of a marriage.
Requirements For A Valid Deed
Premise: Grantor, grantee & accurate legal description
Habendum: Consideration
Granting Clause - (Words of Conveyance)
Habendum Clause - (Defines Ownership Taken By the Grantee) In a deed, the words that clarify the purpose of the deed, with the phrase: “TO HAVE AND TO HOLD”.
Designation of any limitations
Exceptions and Reservations
Testimonium: Signature of Grantor (Acknowledgment).
Delivery by the grantor & acceptance by the grantee.
The date is not a requirement of a valid deed, but when a deed is recorded it is dated by the recorder of deeds.
General Warranty Deed
“I own it and I can convey it to you.” A general warranty deed contains each of the five “covenants” or promises of the seller
Covenant of Seisin
I guarantee that I own it and have the right to sell it.”
Covenant of Quiet Enjoyment
“No one will interfere with your possession or right to use the property.”
Covenant Against Encumbrances
“I promise there are no hidden liens or encroachments other than those stated in the deed.”
Covenant of Further Assurance
“If there is a defect, I promise to take care of any problems.”
Covenant of a Warranty Forever
“These promises go back as far as there were public records.”
Special Warranty Deed
“I promise you that it’s been clear since I’ve had it. I’m not making any promises before that.” Seller is only making these promises during the time period in which he/she owned the property. “I will defend and correct any flaws in the title that occurred during the time that I owned it, but not before.”
Bargain and Sale Deed
“I own it… but that’s about it! I’m not going to make any promises.”
