Deeds, Title, and Excise Tax Flashcards
unrecorded deeds can be _____ by later recorded deeds.
invalidated
North Carolina doesn’t require a deed to be _____ to be ____. However, still do it for obvious reasons.
recorded
valid
Which three types of deeds are considered deeds of conveyance in North Carolina?
In North Carolina, only general warranty deeds, special warranty deeds, and quitclaim deeds are considered deeds of conveyance. Bargain and sale deeds are not.
Covenants are a type of protection for grantees that are included (or not) in certain types of deeds. There are five:
what do each of them do
Covenant of Seisin: “I guarantee that the current owner truly possesses the property and has the legal right to sell it. You can trust that you’ll receive full ownership without any surprises.”
Covenant of Right to Convey: “Rest assured, the owner has the authority to transfer the property to you. You won’t face any legal obstacles or restrictions on the transfer.”
Covenant Against Encumbrances: “I promise that the property is free from any hidden burdens or claims that could affect your ownership. You’re getting a clean slate without any unexpected liabilities.”
Covenant for Quiet Enjoyment: “Once the property is yours, you can live on, use, and enjoy it without disturbances. I vouch for your peaceful and undisturbed possession.”
Covenant of Warranty: “I provide a shield of protection for any future claims against your ownership. If any issues arise from the past, I’ll defend your title and compensate you for any losses.”
A general warranty deed, sometimes called a full covenant and warranty deed or simply warranty deed, is a deed containing…
the strongest and broadest form of guarantee of title. the grantor promises to defend the title, no matter the claim against it. General warranty deeds come with all five of the covenants.
special warranty deed, also known as the limited warranty deed. This type of deed only…
protects against defects that occurred while the grantor held title.
It only has two warranties:
that the grantor received the title
that liens and/or encumbrances were not put on the property by the grantor.
A true bargain and sale deed is a deed without any…
without any covenants or warranties against encumbrances. It only indicates that the grantor has possession of the property and holds the right to convey title.
A quitclaim deed, sometimes called a non-warranty deed, is a type of deed that conveys any interest, title, or right to a parcel of land the grantor might have at the time the deed is executed. However…
the interests, title, and rights conveyed are uncertain, as the grantor makes no guarantees.
If these deeds could talk, each of them would say the following:
General warranty deed: “I own this property and I can vouch for the title.”
Special warranty deed: “I own this property and I can vouch for the title only during the time that I have owned it.”
Bargain and sale deed: “I own this property, but I can’t guarantee anything beyond that.”
Quitclaim deed: “I’m conveying my ownership interest to you, whatever that may be, and I may not even have ownership interest at all.” 🤷♀️
The four Special Purpose Deeds and what they do.
Of course! Here’s what each of these types of deeds might say if they could talk:
Correction Deed:
“Oops, a little mistake happened, but I’m here to make things right! I fix errors in previous deeds like typos or incorrect legal descriptions. Think of me as the eraser for property transfer hiccups.”
Trustee’s Deed:
“I’m the bearer of trust! When a property is held in a trust, I’m the one who ensures it’s transferred according to the rules of that trust. Loyalty and responsibility are my guiding principles.”
Sheriff’s Deed:
“The gavel has spoken, and I’m the result. I come into play after a property has been sold at a foreclosure auction. I carry the weight of the law, transferring ownership based on the legal process that led to the auction.”
Deed of Gift:
“Love, generosity, and a bow-tied ribbon! I’m all about heartfelt giving. No exchange of money here; just a sincere transfer of property from one person to another as a gift. Cherish it!”
The deed is void if it is not recorded within 2 years
Deed of Gift
The tax amounts to $1 for every $500 of the property’s sales price.
Excise Tax
excise tax formula
purchase price/500.
round up that answer.
multiply that answer by 500.
then that answer ÷ 500 = Excise tax
seller concessions or any kind of special financing they use do not impact…
the amount of excise tax paid (DO NOT add the mortgage amount to the purchasing amount. it doesn’t matter.)
A marketable title is
a title that is free from significant encumbrances or defects (such as liens) that might otherwise prevent a purchaser from enjoying or eventually selling the property.
in NC, a title search must be done by:
an attorney
a broker should never offer their opinion on the status of the…
title
North Carolina’s Marketable Title Act
if a chain of title can be traced back for 30 years with no other claim arising during that 30-year period, then the title is marketable.
Color of title can be created by such things as:
Adverse possession
Errors in the current or prior deeds
Fraud
If ownership cannot be traced through an unbroken chain because of a gap in the chain, it is necessary to…
establish ownership by a court action called a suit to quiet title.
an abstract of title is…
an abbreviated history of a property.
It’s important to note that abstractors do not give opinions concerning the condition of the title. The ____ does.
attorney
There are two main ways to provide evidence of title, and one less frequently used way that we’ll talk about:
A Torrens certificate (this is the less frequently used option)
An (attorney’s) opinion of title
Title insurance
The Torrens system is…
a recording system used in some states in which the state holds all records of land and title ownership, evidenced by a certificate of title. The Torrens system is used in North Carolina, but rarely.
Real property registered in the Torrens system _____ be lost to adverse possession. That’s how powerful a Torrens certificate is!
cannot
title insurance explained:
Title insurance is like a protective policy for property buyers and lenders. It covers problems with ownership history, like mistakes or debts, that happened before the purchase but show up later.
Unlike regular insurance, you pay for title insurance once upfront. The person handling the sale usually arranges it.
Before giving the insurance, a legal expert checks records to make sure it’s valid. They might give a preview report with details about what’s covered and any issues found.
If you’re a broker, always suggest property surveys and title insurance to buyers, even without a mortgage. If buyers have detailed questions, tell them to ask a lawyer at closing. And if needed, it’s okay to refer them to other experts.
There are four standard exceptions to a title policy:
The rights of people currently in possession of the property (for example, the rights of a tenant with a valid lease)
Any encroachments, encumbrances, or boundary issues that an accurate survey would show
Easements that aren’t recorded in the public record
Mechanic’s liens or tax liens that aren’t shown in the public record
An owner’s policy with extended coverage insures against items such as:
Certain unrecorded liens not known by the policyholder
Off-record easements or adverse possession claims
Not having access to the property
Discrepancies in the boundaries of the property, or certain kinds of encroachments
Defects discoverable through a property inspection and examination of survey
Title companies offer different types of insurance policies, with the most common being (explain their purposes as well):
In simple terms, owner’s title insurance helps buyers, and lender’s title insurance helps lenders, both by dealing with potential problems linked to the property’s history.
Documents affecting any interest, right, or title to a parcel of real estate must be recorded in the office of the register of deeds in the…
the county where the property is located.
The Connor Act is…
a state law that requires all conveyances of real property to be recorded to be effective against claims by third parties.
A memorandum of contract is…
a short version, or memo, of a contract that can be recorded instead of the complete contract.
Pure race state means…
whoever records first (think of this as whoever wins the race to the office of the register of deeds 🏃♀️) will win out on any disputes that may arise. This makes it extremely important for purchasers of real property in North Carolina to record their deeds as soon as possible.
