Deeds Flashcards
Delivery of a deed
As a general rule, delivery of the deed is the final operative act to complete a conveyance of title to the grantee, because courts will infer the grantee’s acceptance if the conveyance is beneficial to him. However, all courts will consider evidence that is contrary to the presumption or inference. For a deed to be delivered, the grantor must have taken some action with the intent that it operate to pass title immediately. Recording a deed that has been acknowledged before a notary is such an action and is presumed to carry with it the requisite intent. Even without the knowledge of the grantee, delivery to the recorder’s office will satisfy the the delivery requirement. If the grantor intends the recording of the document to be the final act in vesting title in the grantee, then such recording constitutes delivery.
Valid deed requirements
To be valid, a deed must
1. be in writing,
2. sufficiently describe the land,
3. identify the grantor and grantee,
4. evidence an intention to convey the land, and
5. be singed by the grantor.
The parties may be identified by name or by describing them in some other way. If the grantee’s name is left blank, some courts presume that the person taking delivery has authority to fill it in, and if he does so, the deed is valid.
Voidable and void deeds
A defective deed may be voidable, which means that it would be set aside only if the property had not been conveyed to a bonafide purchaser, or it could be void, meaning that the deed would be set aside regardless of the property having passed to a bona fide purchaser. Deeds obtained by means of, among other things, duress, undue influence, or mistake are considered voidable. Deeds that were forged, never delivered, or obtained by fraud in the factum are void.
Title insurance
A title insurance policy insures that a good record title of the property exists as of the policy’s date and agrees to defend the record title if litigated. Title insurance can be taken out by either the owner of the property or the mortgage lender. An owner’s policy protects only the person who owns the policy (usually either the property owner or the mortgage lender) and does not run with the land to subsequent purchasers. In contrast, a lender’s policy follows any assignment of the mortgage loan. However, the policy ends when the mortgage loan is paid off.
Covenant against encumbrances
The covenant against encumbrances assures that there are no encumbrances (e.g., mortgages, easements, servitudes) against the title or interest conveyed. The covenant against encumbrances is a present covenant, which is breached, if at all, at the time of conveyance. Present covenants do not run with the land and cannot be enforced by remote grantees. In jurisdictions that do not follow the majority rule, a remote grantee may sue on the covenant against encumbrances unless he had notice of the encumbrance. Some courts hold that the covenant against encumbrances is not breached if the easement is visible.
Quitclaim deed
Unlike deeds that contain covenants for title, a quitclaim deed is a release of whatever interest the grantor has in the property, if any. A quitclaim deed contains no assurances, releasing to the grantee whatever the grantor happens to own.
Determining whether an absolute deed is really a mortgage
If a deed is given for security purposes rather than as an outright transfer of the property, it will be treated as an equitable mortgage and the creditor will be required to foreclose it by judicial action like any other mortgage. In determining whether an absolute deed is really a mortgage, the court considers the following factors:
- the existence of a debt or promise of payment by the deed’s grantor,
- the grantee’s promise to return the land if the debt is paid,
- the fact that the amount advanced to the grantor/debtor was much lower than the value of the property,
- the degree of the grantor’s financial distress, and
- the parties’ prior negotiations.
