Property AMP Set - Transfer Of Title By Deed; Recording

Question 1

Which of the following parties would be entitled to prevail against a prior transferee under “notice” and “race-notice” statutes?

A A donee of the land

B One who took the land by specific bequest

C A mortgagee for value

D A judgment creditor

Answer 1

C

A mortgagee for value would be entitled to prevail against a prior transferee under “notice” and “race-notice” statutes. Notice and race-notice recording acts protect bona fide purchasers (“BFPs”) from prior unrecorded conveyances of the same property. A BFP is a purchaser who takes land without notice of a prior instrument and pays valuable consideration. Donees, heirs, and devisees are not BFPs because they do not give value for their interests; i.e., they are not purchasers. Thus, a donee of the land and one who took the land by specific bequest would not be entitled to protection under the recording acts. In contrast, mortgagees for value (i.e., those who loan substantial money in return for a mortgage on the land) are treated as “purchasers,” either expressly by the recording act or by judicial classification. A judgment creditor would not be entitled to prevail against a prior transferee under “notice” and “race-notice” statutes. In nearly all states, a plaintiff who obtains a money judgment can obtain, by statute, a judgment lien on the defendant’s real estate. The majority of cases hold that the judgment lienor is not protected either because (i) he is not a BFP because he did not pay value for the judgment, or (ii) the judgment attaches only to property “owned” by the defendant, and not to property the defendant has previously conveyed away, even if that conveyance was not recorded. QUESTION ID: P0115A Additional Learning

Question 2

If a grantor executes a deed but fails to deliver it during her lifetime, __________.

A Title passes on the grantor’s death

B Title passes when the deed is executed

C Title does not pass

D Title is held in trust by the grantor’s estate for the intended grantee

Answer 2

C

If a grantor executes a deed but fails to deliver it during her lifetime, title does not pass. A deed is not effective to transfer an interest in realty unless it has been delivered by the grantor and accepted by the grantee. The delivery requirement is satisfied through words or conduct evidencing the grantor’s intent that that title pass immediately and irrevocably. Without adequate delivery, there is no conveyance of title to the intended grantee. Thus, title does NOT pass on the grantor’s death, and title is NOT held in trust by the grantor’s estate for the intended grantee. Moreover, while a deed must be properly executed to be valid, title does not pass when the deed is executed, but rather upon delivery. QUESTION ID: P0119B Additional Learning

Question 3

O conveys Blackacre to A on Monday. O conveys Blackacre to B on Tuesday. A records on Wednesday. B records on Thursday.
If both parties paid valuable consideration for the land, and neither knew of the other’s deed, who owns Blackacre?

A B, under a race or race-notice statute

B B, under every recording act

C B, under a notice statute

D A, under every recording act

Answer 3

C

If both parties paid valuable consideration for the land, and neither knew of the other’s deed, B owns Blackacre under a notice statute. A notice statute is a recording act that alters the common law rule of “first in time, first in right” to protect a subsequent bona fide purchaser (“BFP”)—i.e., one who pays valuable consideration and lacks notice of the prior conveyance. A notice statute requires only that the subsequent purchaser have no actual or constructive (i.e., record or inquiry) notice at the time of the conveyance. While a prior grantee can prevent the existence of a subsequent BFP by recording, a BFP will be protected under a notice statute even if she does not record. Here, B prevails over A under a notice statute because B had no notice of the O-A conveyance at the time of her conveyance from O. B would not own Blackacre under a race or race-notice statute (and thus not under every recording act). Under a race statute, the first party to record wins, regardless of whether she has notice of a prior conveyance. Under a race-notice statute, a subsequent BFP prevails over a prior grantee only if she records before the prior grantee. Here, A prevails over B under these acts because B did not record first. Because B prevails over A under a notice statute, A does not own Blackacre under every recording act. QUESTION ID: P0120A Additional Learning

Question 4

O conveys Blackacre to A on Monday. O conveys Blackacre to B on Tuesday. A records on Wednesday. B records on Thursday.
If both parties paid valuable consideration for the land, and neither knew of the other’s deed, who owns Blackacre?

A B, under every recording act

B A, under every recording act

C A under a race statute, but B under a race-notice statute

D A, under a race or race-notice statute

Answer 4

D

If both parties paid valuable consideration for the land, and neither knew of the other’s deed, A owns Blackacre under a race or race-notice statute. A race statute is a recording act that alters the common law rule of “first in time, first in right” to protect the first party to record. Notice is irrelevant. Thus, a later transferee who records first takes title even if she knew of the prior conveyance. Here, A prevails over B under race statute because A recorded first. Under a race-notice statute, a subsequent bona fide purchaser (“BFP”)—i.e., one who pays valuable consideration and lacks notice of the prior conveyance—prevails over a prior grantee only if she records before the prior grantee. Here, A prevails—and NOT B—under a race-notice statute because B did not record first. A would not own Blackacre under a notice statute (and thus not under every recording act). Under a notice statute, a subsequent BFP need not record in order to prevail over a prior grantee who failed to record. A notice statute requires only that the subsequent purchaser have no actual or constructive (i.e., record or inquiry) notice at the time of the conveyance. Here, if B had no notice of the O-A conveyance at the time of her conveyance from O, B would prevail over A even though B did not record her deed first. Because A prevails over B under a race or race-notice statute, B does not own Blackacre under every recording act. QUESTION ID: P0120B Additional Learning

Question 5

A deed generally must contain which of the following in order to be valid?

A The grantee’s signature.

B The grantor’s words of intent.

C The grantor’s acknowledgment.

D The metes and bounds of the land.

Answer 5

B

A deed generally must contain the grantor’s words of intent in order to be valid. A deed must demonstrate that the grantor intends to transfer realty (e.g., by using the word “grant”). However, no particular technical phrasing is necessary. A deed generally need not contain the grantor’s acknowledgment in order to be valid. Before a deed can be recorded under most recording statutes, it must be acknowledged by the grantor before a notary public. However, the grantor’s signature, without an acknowledgement, is sufficient for the deed itself to be valid. A deed generally need not contain the metes and bounds of the land in order to be valid. While a deed must identify the land, a metes-and-bounds description is only one of many ways property may be described. A description is sufficient if it provides enough information to identify the property in question (e.g., a street address, or a reference to a lot in a recorded subdivision plat). A deed generally need not contain the grantee’s signature in order to be valid. Even if the deed contains covenants on the grantee’s part, her acceptance of the deed is sufficient to make those covenants enforceable. QUESTION ID: P0103 Additional Learning

Question 6

A court will never reform a deed that __________.

A has been relied on by a bona fide purchaser

B reflects the parties’ mutual mistake

C reflects one party’s unilateral mistake

D contains a drafting error

Answer 6

A

A court will never reform a deed that has been relied on by a bona fide purchaser. Reformation is an equitable action in which the court rewrites a deed to make it conform to the parties’ intention. Reformation will be granted if the deed does not express what the parties agreed to for any of the following reasons: It reflects the parties’ mutual mistake;It contains a drafting error; or It reflects one party’s unilateral mistake—but only if that mistake was induced by the other party’s misrepresentation or inequitable conduct. However, if property has passed to a bona fide purchaser for value who relied on the original language of the deed, the court will not reform it. QUESTION ID: P0107 Additional Learning

Question 7

Regarding the delivery and acceptance of a deed, which of the following will courts not generally presume?

A A grantee accepts a deed if she is a minor.

B A grantee’s return of a deed is a reconveyance to the grantor.

C A grantee accepts a deed if the conveyance would benefit her.

D A grantee’s possession of a deed means it has been delivered.

Answer 7

B

Regarding the delivery and acceptance of a deed, courts will not presume that a grantee’s return of a deed is a reconveyance to the grantor. A deed will not transfer an interest in land unless it has been delivered by the grantor and accepted by the grantee. Title passes to the grantee upon effective delivery, and returning the deed to the grantor has no effect. To effect a reconveyance, the grantee must execute and deliver a new deed. Courts generally will presume that a grantee’s possession of a deed means it has been delivered. Unless the grantor clearly expressed his intent that title pass to the grantee without physical delivery, the grantor’s continued possession of the deed raises a presumption of nondelivery. Conversely, the grantee’s possession of a properly executed deed raises a presumption of delivery. Regarding acceptance of a deed, courts generally will presume that a grantee accepts a deed if the conveyance would benefit her. In most states, acceptance is presumed if the conveyance is beneficial to the grantee, regardless of whether the grantee knows of it. In other states, acceptance is presumed only where the grantee knows of the grant and fails to reject it. Courts also will presume that a grantee accepts a deed if she is a minor. In all states, acceptance is presumed if the grantee is an infant or an incompetent. QUESTION ID: P0108 Additional Learning

Question 8

What is one effect of properly recording a deed to real property?

A Preventing third parties from acquiring title by adverse possession.

B Raising a presumption that the deed is authentic.

C Validating an improperly executed deed.

D Making a properly executed deed enforceable between grantor and grantee.

Answer 8

B

Raising a presumption that the deed is authentic is one effect of properly recording a deed to real property. A deed need not be recorded to be valid. However, properly recording a deed has several advantages, such as raising rebuttable presumptions that the instrument was validly delivered and that it is authentic. A significant effect of recording a deed is to give parties constructive notice of its existence and contents. Putting the world on record notice protects the landowner by preventing title from being taken by a subsequent bona fide purchaser from the same grantor. Preventing third parties from acquiring title by adverse possession is not an effect of properly recording a deed to real property. Recordation does not protect against interests that arise by operation of law (e.g., title by adverse possession), rather than from a recordable document. Because there is no instrument to record to perfect such interests, the recording acts do not apply. Making a properly executed deed enforceable is not an effect of properly recording a deed to real property. Recordation is wise because it prevents a later grantee from being a bona fide purchaser and raises the presumptions discussed above. However, recordation is not necessary for a valid conveyance; a deed is effective and enforceable between the original parties to it without being recorded. Validating an improperly executed deed is not an effect of properly recording a deed to real property. To be valid, a deed must be a writing, signed by the grantor, that identifies the land and the parties. A deed is not effective unless it has been delivered and accepted. While proper recording raises the presumption that a deed is authentic and was validly delivered, these presumptions are rebuttable. Recording a deed does not validate any aspect of an otherwise invalid conveyance (e.g., a forged or undelivered deed). QUESTION ID: P0111 Additional Learning

Question 9

Which of the following parties cannot be protected as a bona fide purchaser of land?

A A devisee of the land.

B A mortgagee of the land.

C A purchaser from an heir to the land.

D A donee from a bona fide purchaser of the land.

Answer 9

A

A devisee of the land cannot be protected as a bona fide purchaser (“BFP”) of land. Notice and race-notice recording acts protect BFPs from prior unrecorded conveyances of the same property. A BFP is a purchaser who takes land without notice of a prior instrument and pays valuable consideration. Donees, heirs, and devisees are not BFPs because they do not give value for their interests; i.e., they are not purchasers. A mortgagee of the land can be protected as a BFP of land. Mortgagees for value (but not those who receive a mortgage only as security for a preexisting debt) are treated as purchasers, either expressly by recording acts or by judicial classification. Thus, mortgagees for value who take without notice can be protected as BFPs. A purchaser from an heir to the land can be protected as a BFP of land. Donees, heirs, and devisees themselves are not purchasers and thus cannot be BFPs. However, one who buys land from such a party will be protected against a prior unrecorded conveyance from the record owner. A donee from a bona fide purchaser of the land can be protected as a BFP of land. Under the shelter rule, anyone who takes from a BFP will be treated like a BFP (i.e., will prevail against any interest her transferor would have prevailed against). This rule exists to protect the BFP by preserving his ability to convey property. It applies even when his transferee had actual knowledge of a prior unrecorded interest or did not take for substantial pecuniary value (i.e., was a donee). However, a non-BFP who previously had title cannot acquire BFP status by selling the land to a BFP and then repurchasing it. QUESTION ID: P0115 Additional Learning

Question 10

Which of the following does not charge a purchaser of realty with inquiry notice?

A The presence of a third party on the property.

B His deed’s reference to an unrecorded instrument.

C His grantor’s use of a quitclaim deed.

D The absence of his grantor’s deed from the chain of title.

Answer 10

C

His grantor’s use of a quitclaim deed does not charge a purchaser of realty with inquiry notice. Inquiry notice means that a subsequent grantee is held to have knowledge of any facts that a reasonable inquiry would have revealed, even if he made no inquiry. A quitclaim deed releases whatever interest a grantor might have in the property and contains no covenants for title. Nonetheless, in the majority of states, grantees are not charged with inquiry notice from the mere fact that a quitclaim deed was used. The presence of a third party on the property charges a purchaser of realty with inquiry notice. A title search is not complete without an examination of the property. A purchaser is charged with knowledge of whatever an inspection of the property would have disclosed and with anything that would have been disclosed through an inquiry of the possessor. His deed’s reference to an unrecorded instrument charges a purchaser of realty with inquiry notice. If a recorded instrument makes reference to an unrecorded transaction, the grantee is bound to inquire of the nature and character of the unrecorded transaction. The absence of his grantor’s deed from the chain of title charges a purchaser of realty with inquiry notice. When a grantor’s title documents are unrecorded, the grantee is required, at his peril, to insist on seeing the deed and requiring it to be recorded. QUESTION ID: P0116 Additional Learning

Question 11

Parol evidence generally will not be admitted to show __________.

A oral conditions on the delivery of a deed given to a grantee

B oral conditions on the delivery of a deed placed in escrow

C that a deed was intended only as security for an obligation

D that a grantor did not intend to deliver a deed

Answer 11

A

Parol evidence generally will not be admitted to show oral conditions on the delivery of a deed given to a grantee. In most jurisdictions, parol evidence is not admissible to show that a facially unconditional deed given directly to a grantee was in fact subject to a condition. The condition will be ignored. This is not the case when the deed is deposited with an escrow. Parol evidence generally will be admitted to show oral conditions on the delivery of a deed placed in escrow. A grantor may deliver a deed by giving it to a third party (i.e., an escrow) who is instructed to give it to the grantee. Parol evidence generally is admissible to show the conditions and terms on which the deed was placed in escrow, even though the deed itself is unconditional. This is not the case when the deed is given directly to a grantee. Parol evidence generally will be admitted to show that a grantor did not intend to deliver a deed. Delivery requires that the grantor intend the deed to have a present operative effect. Parol evidence is admissible to prove that the grantor lacked this intent. Note that courts will allow such evidence to show that no delivery was intended, but will not allow it to show that delivery was conditional. Parol evidence always will be admitted to show that a deed was intended only as security for an obligation. If a court concludes by clear and convincing evidence that a deed was really given for security purposes, it will treat the transaction as an equitable mortgage. An equitable mortgage may be evidenced by: (i) the grantor’s debt; (ii) the grantee’s promise to return the land if the debt is paid; (iii) the amount advanced to the grantor being much lower than the property value; (iv) the degree of the grantor’s financial distress; and (v) the parties’ prior negotiations. QUESTION ID: P0118 Additional Learning

Question 12

A deed that does not express the parties’ intention because of a mutual mistake:

A Will be set aside as void

B Must stand as drafted

C Presents a ground for reformation

Answer 12

C

A deed that does not express the parties’ intention because of a mutual mistake presents a ground for reformation. Reformation is an equitable action in which the court rewrites a deed to make it conform to the parties’ intention. Reformation will be granted if the deed does not express what the parties agreed to for any of the following reasons: 1. It reflects the parties’ mutual mistake;2. It contains a drafting error; or3. It reflects one party’s unilateral mistake—but only if that mistake was induced by the other party’s misrepresentation or inequitable conduct. Thus, a deed that does not express the parties’ intention because of a mutual mistake will NOT always stand as drafted. However, if property has passed to a bona fide purchaser for value who relied on the original language of the deed, the court will not reform it. A deed that does not express the parties’ intention because of a mutual mistake will NOT be set aside as void. A void deed will be set aside even if the property has passed to a bona fide purchaser. However, mutual mistake does not make a deed void. Deeds considered void include those that were forged, were never delivered, or were obtained by fraud in the factum. QUESTION ID: P0107A Additional Learning

Question 13

Which of the following facts is most likely to make a court find that a deed was never delivered?

A The grantor kept the deed in his possession after signing it

B The conveyance was beneficial to the grantee, but the grantee was unaware of it

C The deed was mailed to an incompetent grantee

Answer 13

A

If the grantor kept the deed in his possession after signing it, a court is most likely to find that the deed never was delivered. A deed will not transfer an interest in land unless it has been delivered by the grantor and accepted by the grantee. Unless the grantor clearly expressed his intent that title pass to the grantee without physical delivery, the grantor’s continued possession of the deed raises a presumption of nondelivery. The delivery requirement is satisfied where the grantor manually delivers the deed to the grantee, which may be accomplished through the mail or physical transfer. Furthermore, in all states, acceptance is presumed if the grantee is an infant or an incompetent. Thus, if the deed were mailed to an incompetent grantee, a court would find a valid delivery. In most states, the grantee’s acceptance of a deed is presumed if the conveyance is beneficial to the grantee, even if the grantee was unaware of it. In other states, acceptance is presumed only where the grantee knows of the grant and fails to reject it. Note, however, that all presumptions relating to delivery and acceptance are rebuttable.

Question 14

In a __________ deed, the grantor covenants against only the title defects he himself created.

A Special warranty

B General warranty

C Quitclaim

Answer 14

A

In a special warranty deed, the grantor covenants against only the title defects he himself created, and not those created by his predecessors. Statutes in many states provide that the use of the word “grant” in a conveyance creates by implication limited assurances against acts of the grantor but not the grantor’s predecessors. In a general warranty deed, the grantor covenants against title defects created by both himself and all prior titleholders. The usual covenants for title include present covenants, which can be breached only at the time of conveyance; and future covenants, which can be breached only upon eviction (i.e., interference with the possession of the grantee or his successors by someone with better title). In a quitclaim deed, the grantor releases whatever interest he has in the property, if any. Thus, a quitclaim deed contains no covenants warranting the grantor’s title. QUESTION ID: P0110B Additional Learning

Question 15

Which of the following is an example of a typical race-notice statute?

A “No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof whose conveyance is first recorded.”

B “No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof, unless it is recorded.”

C “No conveyance or mortgage of an interest in land is valid against any subsequent purchaser whose conveyance is first recorded.”

Answer 15

A

“No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof whose conveyance is first recorded,” is an example of a typical race-notice statute. A race-notice statute is a recording act that alters the common law rule of “first in time, first in right” to protect a subsequent bona fide purchaser (“BFP”)—i.e., one who pays valuable consideration and lacks notice of the prior conveyance. However, to obviate questions about the time of delivery and to induce parties to record promptly, race-notice statutes protect BFPs only if they are first to record. “No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof, unless it is recorded,” is an example of a typical notice statute. Under a notice statute, a subsequent BFP need not record in order to prevail over a prior grantee who failed to record. A notice statute requires only that the subsequent purchaser have no actual or constructive (i.e., record or inquiry) notice at the time of the conveyance. “No conveyance or mortgage of an interest in land is valid against any subsequent purchaser whose conveyance is first recorded,” is an example of a typical race statute. Under a race statute, the first party to record wins, regardless of whether she has notice of a prior conveyance. QUESTION ID: P0112B Additional Learning

Question 16

Under __________ statute, a subsequent transferee with notice of a prior conveyance can prevail over the prior grantee.

A Any recording

B A notice

C A race-notice

D A race

Answer 16

D

Under a race statute, a subsequent transferee with notice of a prior conveyance can prevail over the prior grantee. A race statute is a recording act that alters the common law rule of “first in time, first in right” to protect the first party to record. Notice is irrelevant. Thus, a later transferee who records first takes title even if she knew of the prior conveyance. Under a notice statute, a subsequent bona fide purchaser (“BFP”)—i.e., one who pays valuable consideration and lacks notice of the prior conveyance—need not record in order to prevail over a prior grantee who failed to record. However, a notice statute requires that the subsequent purchaser have no actual or constructive (i.e., record or inquiry) notice at the time of the conveyance. Under a race-notice statute, a subsequent BFP prevails over a prior grantee only if she records before the prior grantee. Thus, a subsequent transferee will not prevail if she had notice of the prior conveyance. Therefore, under any recording statute other than a race statute, a subsequent transferee with notice of a prior conveyance cannot prevail over the prior grantee. QUESTION ID: P0114A Additional Learning

Question 17

Which of the following is true when a grantor transfers land to hinder a creditor?

A The transfer is void.

B The transfer is voidable only at the transferee’s option.

C The creditor may seek to have the transfer set aside.

D The transferee will retain the land if it was a gift.

Answer 17

C

When a grantor transfers land to hinder a creditor, the creditor may seek to have the transfer set aside. A creditor may set aside a fraudulent conveyance under the Uniform Fraudulent Transfer Act (“UFTA”), which nearly all states have adopted. A conveyance is fraudulent if the grantor/debtor actually intended to hinder, delay, or defraud a creditor; or if the grantor (i) did not receive a reasonably equivalent value in exchange for the transfer and (ii) was insolvent or became insolvent as a result of the transfer. When a grantor transfers land to hinder a creditor, the transfer is NOT voidable only at the transferee’s option. The UFTA provides a remedy for creditors, not transferees. When a grantor transfers land to hinder a creditor, the transfer is NOT void. Rather, the creditor can seek to have the transfer set aside under the UFTA. However, the conveyance will not be set aside as against a grantee who took in good faith and paid reasonably equivalent value. When a grantor transfers land to hinder a creditor, the transferee might NOT retain the land if it was a gift. A deed will not be set aside under the UFTA as against any grantee who took in good faith and paid reasonably equivalent value. However, the transfer may be set aside by a court if the land was given as a gift (i.e., without receiving reasonably equivalent value). QUESTION ID: P0104 Additional Learning

Question 18

Which of the following is a future covenant for title?

A Covenant of warranty

B Covenant of seisin

C Covenant against encumbrances

D Covenant of right to convey

Answer 18

A

The covenant of warranty is a future covenant for title. A general warranty deed contains covenants for title through which the grantor warrants against title defects created by herself and prior titleholders. The usual covenants for title include present covenants, which can be breached only at the time of conveyance; and future covenants, which can be breached only upon eviction (i.e., interference with the possession of the grantee or her successors by someone with better title). Through the covenant of warranty, the grantor agrees to defend the grantee’s title from any third party’s lawful or reasonable claims of title and to compensate the grantee for any related loss. Because this covenant cannot be breached until a third party interferes with possession, it is a future covenant. The covenant of seisin is a present covenant for title. Through it, the grantor warrants that she has the estate or interest she purports to convey (i.e., both title and possession) at the time of the grant. The covenant against encumbrances is a present covenant for title. Through it, the grantor warrants that there are no encumbrances (e.g., easements, profits, or mortgages) against the title or interest conveyed. The covenant of right to convey is a present covenant for title. Through it, the grantor warrants that she has the power and authority to make the grant (i.e., she has title or is the titleholder’s authorized agent). QUESTION ID: P0109 Additional Learning

Question 19

In order to prevail over a prior grantee under a notice statute, when must a subsequent bona fide purchaser record?

ABefore the grantor records.

B Before she learns of the prior grant.

C A bona fide purchaser will prevail over a prior grantee under a notice statute without ever recording.

D Before the prior grantee records.

Answer 19

C

A bona fide purchaser will prevail over a prior grantee under a notice statute without ever recording. A notice statute is a recording act that alters the common law rule of “first in time, first in right” to protect a subsequent bona fide purchaser (“BFP”)—i.e., one who gives valuable consideration and lacks notice of the prior conveyance. A notice statute requires only that the subsequent purchaser have no actual or constructive (i.e., record or inquiry) notice at the time of her conveyance. While a prior grantee can prevent the existence of a subsequent BFP by recording, a BFP will be protected even if she does not record. A subsequent BFP need not record before she learns of the prior grant. As is explained above, notice statutes protect subsequent BFPs regardless of whether they record. Additionally, the notice requirement of BFP status is measured from the time of the conveyance—not from the time of recording. Similarly, a subsequent BFP under a notice statute need not record before the grantor records. She will prevail simply because she took for value and lacked notice of the prior grant at the time of her conveyance. Also, a subsequent BFP need not record before the prior grantee records. This is the requirement only of race and race-notice statutes. QUESTION ID: P0113 Additional Learning

Question 20

What is the effect of language in an otherwise properly delivered deed specifying that title will not pass to the grantee until the grantor’s death?

A The language is inadmissible and thus stricken from the deed.

B The deed is void unless it complies with testamentary formalities.

C No delivery occurs and title does not transfer.

D The deed creates a life estate in the grantor and a future interest in the grantee.

Answer 20

D

The effect of language in an otherwise properly delivered deed specifying that title will not pass to the grantee until the grantor’s death is that the deed creates a life estate in the grantor and a future interest in the grantee. This is the result only when the deed expressly contains such a provision. It is not correct that the language is inadmissible and thus stricken from the deed. In most jurisdictions, parol evidence is not admissible to show that a facially unconditional deed given directly to a grantee was in fact subject to a condition. However, language in the deed itself is admissible. This language will not be stricken but rather creates a life estate in the grantor and a future interest in the grantee. The effect of this language is not that the deed is void unless it complies with testamentary formalities. When the grantor delivers to the grantee a deed that is facially absolute but orally conditioned on the grantor’s death, the deed is usually held testamentary. A testamentary conveyance is void unless executed in accordance with wills law. However, this deed would be immediately operative, creating a life estate in the grantor with a future interest in the grantee. Nor is the effect of this language that no delivery occurs and title does not transfer. If a grantor executes a deed but fails to deliver it during his lifetime, no conveyance of title takes place. For delivery to occur, the grantor must intend that the deed have some present operative effect. The test is whether the grantor relinquished absolute and unconditional control. A deed that is delivered containing the provision in question will immediately create a life estate in the grantor and a future interest in the grantee. QUESTION ID: P0119 Additional Learning

Question 21

A recording act that provides: “Any conveyance of an interest in land, other than a lease for less than one year, shall not be valid against any subsequent purchaser for value, without notice thereof, unless the conveyance is recorded,” is a __________.

A race statute

B race-notice statute

C statute of frauds

D notice statute

Answer 21

D

A recording act that provides: “Any conveyance of an interest in land, other than a lease for less than one year, shall not be valid against any subsequent purchaser for value, without notice thereof, unless the conveyance is recorded,” is a notice statute. Under a notice statute, a later purchaser of land will prevail over an earlier grantee if she takes without actual or constructive (e.g., record) notice of the earlier grant. The above language is not a race-notice statute. An example of a race-notice statute is: “Any conveyance of an interest in land, other than a lease for less than one year, shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is first recorded.” Under a race-notice statute, a later purchaser will prevail over an earlier grantee only if she takes without actual or constructive (e.g., record) notice of the earlier grant and records before he does. The above language is not a pure race statute. An example of a pure race statute is: “Any conveyance of an interest in land, other than a lease for less than one year, shall not be valid against any subsequent purchaser whose conveyance is first recorded.” Under a race statute, notice is irrelevant. The first party to record, regardless of the date of her conveyance, wins. The Statute of Frauds is not a recording act. Every conveyance of an interest in land with a duration long enough to bring into play a particular state’s Statute of Frauds (typically one year) must be evidenced by a writing, signed by the party to be charged. QUESTION ID: P0120 Additional Learning

Question 22

A deed delivered to a grantee who is dead at the time of delivery is:

A Valid

B Voidable

C Void

Answer 22

C

A deed delivered to a grantee who is dead at the time of delivery is void. A deed is not effective to transfer an interest in real property unless it has been delivered. The grantee must actually exist at the time of delivery; otherwise, the deed is not valid (i.e., void). A void deed will be set aside by a court even if title purportedly has passed to a bona fide purchaser. A deed delivered to a grantee who is dead at the time of delivery is not voidable. In contrast with void deeds, voidable deeds will be set aside only if the property has not passed to a bona fide purchaser. Deeds considered voidable include those executed by incapacitated persons (e.g., minors) or obtained through fraud in the inducement, duress, undue influence, mistake, and breach of fiduciary duty. QUESTION ID: P0102A Additional Learning

Question 23

What type of consideration is required in order to make a deed valid?

A Nominal consideration

B Valuable consideration

C The market value of the land

D No consideration

Answer 23

D

No consideration is required in order to make a deed valid. A deed may validly convey property by inter vivos gift so long as there is donative intent, delivery, and acceptance. Nominal consideration is an amount so insignificant that it bears no relationship to the value of what is being exchanged (e.g., $10 for an interest in real property). Valuable consideration refers to an amount that is more than merely nominal but need not equal the market value of the land (i.e., substantial pecuniary value). Valuable consideration is required in order to claim bona fide purchaser status, but, as stated above, no consideration is required for the validity of a deed. QUESTION ID: P0103B Additional Learning

Question 24

Which of the following deeds is most likely to be set aside as against a bona fide purchaser?

A A forged deed

B A deed executed by a debtor with intent to defraud a creditor

C A deed executed under duress

D A deed executed by a minor grantor

Answer 24

A

A forged deed is most likely to be set aside as against a bona fide purchaser. A forged deed is void, and deeds that are void will be set aside by a court even if the property has passed to a bona fide purchaser. In contrast, deeds executed by a minor grantor or executed under duress are voidable. Voidable deeds will be set aside only if the property has not passed to a bona fide purchaser. A deed executed by a debtor with intent to defraud a creditor may be set aside by the grantor’s creditors as a fraudulent conveyance. Under the Uniform Fraudulent Transfer Act, which nearly all states have adopted, a conveyance is fraudulent if the grantor/debtor actually intended to hinder, delay, or defraud a creditor; or if the grantor (i) did not receive a reasonably equivalent value in exchange for the transfer and (ii) was insolvent or became insolvent as a result of the transfer. However, such a conveyance will not be set aside as against a grantee who took in good faith and paid reasonably equivalent value (i.e., a bona fide purchaser). QUESTION ID: P0104A Additional Learning

Question 25

When a watercourse or body of water forms the boundary of a parcel of real property, accretion causes the legal boundary to change due to __________.

A The slow and imperceptible deposit of soil

B The sudden, perceptible change of the watercourse

C The encroachment of the body of water

Answer 25

A

When a watercourse or body of water forms the boundary of a parcel of real property, accretion causes the legal boundary to change due to the slow and imperceptible deposit of soil. The slow erosion of the bank of a river or stream serving as a boundary results in the owner losing title to that area. Similarly, the slow deposit of soil belongs to the owner of the abutting land. Where accretion builds up in an irregular pattern over the lands of several adjacent property owners, courts determine title to it by (i) extending each owner’s property line out into the water, or (ii) dividing up the newly formed land in proportion to the owners’ interests in the adjoining lands. In contrast, avulsion is the sudden, perceptible change of a watercourse serving as a boundary. Avulsion does not change the legal boundaries, which remain where they were even if this results in a landowner who had river access finding himself landlocked. Similarly, the legal boundary line is not changed by the encroachment of the body of water. When property is encroached upon by a body of water (e.g., a lake enlarges), previously fixed boundary lines do not change and ownership rights are not affected. The boundary lines can be proven even if the land is completely under water. QUESTION ID: P0106A Additional Learning

Question 26

A court is least likely to reform a deed that __________.

A Reflects the parties’ mutual mistake

B Reflects one party’s mistake that was induced by the other party’s misrepresentation

C Contains a drafting error

D Contains a prior agreement the parties wish to change

Answer 26

D

A court is least likely to reform a deed that contains a prior agreement the parties wish to change. Reformation is an equitable action in which the court rewrites a deed to make it conform to the parties’ intention. Reformation will be granted if the deed does not express what the parties agreed to for any of the following reasons: 1. It reflects the parties’ mutual mistake;2. It contains a drafting error; or3. It reflects one party’s mistake—but only if that mistake was induced by the other party’s misrepresentation or inequitable conduct. However, if property has passed to a bona fide purchaser for value who relied on the original language of the deed, the court will not reform it. QUESTION ID: P0107B Additional Learning

Question 27

Which of the following correctly states a presumption regarding the delivery of a deed?

A A grantor’s acknowledgment of a deed before a notary and subsequent recordation constitutes a valid delivery

B A grantee’s return of a deed is a reconveyance to the grantor

C Acceptance is presumed unless the grantee is an infant or incompetent

D A grantee rejects a deed unless she expressly accepts it

Answer 27

A

The following correctly states a presumption regarding the delivery of a deed: A grantor’s acknowledgment of a deed before a notary and subsequent recordation constitutes a valid delivery. A deed will not transfer an interest in land unless it has been delivered by the grantor and accepted by the grantee. Delivery is presumed if the deed is: (i) handed to the grantee, or (ii) acknowledged by the grantor before a notary and recorded. A grantee’s return of a deed is NOT a reconveyance to the grantor. Title passes to the grantee upon effective delivery, and returning the deed to the grantor has no effect. To effect a reconveyance, the grantee must execute and deliver a new deed. A grantee does NOT reject a deed because she failed to expressly accept it. In most states, the opposite is true—acceptance is presumed if the conveyance is beneficial to the grantee, regardless of whether the grantee knows of it. In other states, acceptance is presumed only where the grantee knows of the grant and fails to reject it. In all states, acceptance IS presumed if the grantee is an infant or an incompetent. QUESTION ID: P0108A Additional Learning

Question 28

If a deed never was delivered, but the listed grantee discovers the deed and records it, the deed is:

A Voidable

B Valid

C Void

Answer 28

C

If a deed never was delivered, but the listed grantee discovers the deed and records it, the deed is void. A deed is not effective unless it has been delivered and accepted. While proper acknowledgment and recording raises the presumption that a deed is authentic and was validly delivered, this presumption is rebuttable in most states. Recording a deed, by itself, does not validate any aspect of an otherwise invalid conveyance (e.g., a forged or undelivered deed). Here, the grantor never delivered the deed; thus, it is not valid (i.e., void). A void deed will be set aside by a court even if title purportedly has passed to a bona fide purchaser. If a deed never was delivered, but the listed grantee discovers the deed and records it, the deed is not voidable. In contrast with void deeds, voidable deeds will be set aside only if the property has not passed to a bona fide purchaser. Deeds considered voidable include those executed by incapacitated persons (e.g., minors) or obtained through fraud in the inducement, duress, undue influence, mistake, and breach of fiduciary duty. QUESTION ID: P0111A Additional Learning

Question 29

To which of the following will a court afford the most weight when construing a deed’s inconsistent property descriptions?

A Natural monuments

B Distance measurements

C The name of the property

D Artificial monuments

Answer 29

A

A court will afford natural monuments the most weight when construing a deed’s inconsistent property descriptions. A deed must identify the land to be conveyed. When a mistake or inconsistency in the description leaves in doubt the exact location the property, and the court otherwise lacks clear evidence of the parties’ intent, the following rules of construction apply: Natural monuments prevail over all other methods of description, including artificial monuments, courses and distances, and quantity measurements;Artificial monuments prevail over all but natural monuments; Course measurements (i.e., angles) prevail over distance measurements; andAll of the foregoing prevail over general descriptions (i.e., the name of the property or its square footage or acreage). QUESTION ID: P0105 Additional Learning

Question 30

When a grantee’s successor is ejected by a third party, the original grantor who conveyed the general warranty deed is not breaching __________.

A the covenant of warranty

B the covenant of seisin

C any of the usual covenants for title in a general warranty deed

D the covenant for quiet enjoyment

Answer 30

B

When a grantee’s successor is ejected by a third party, the original grantor who conveyed the general warranty deed is not breaching the covenant of seisin. A general warranty deed contains covenants for title through which the grantor warrants against title defects created by himself and prior titleholders. Through the covenant of seisin, the grantor warrants that he has the estate or interest he purports to convey (i.e., both title and possession) at the time of the grant. The covenant of seisin can be breached only at the time of the initial conveyance; thus, it does not run to the grantee’s successors. On the other hand, the original grantor who conveyed the general warranty deed is breaching some of the usual covenants for title in a general warranty deed. Among the usual covenants in a general warranty deed are future covenants, which run with the land. Thus, a grantor could be liable for breaching one of these covenants for title, as explained below, if the grantee’s successors are disturbed in possession. When a grantee’s successor is ejected by a third party, the original grantor who conveyed the general warranty deed is breaching the covenant for quiet enjoyment. Through this covenant, a grantor warrants that the grantee will not be disturbed by a third party’s lawful claim of title to the property. This covenant runs with the land to the grantee’s successors and can be breached multiple times. The lawful ejectment of the grantee or her successor would constitute a breach. The original grantor also is breaching the covenant of warranty. Through this covenant, the grantor agrees to defend the grantee’s title from any third party’s lawful or reasonable claims of title, and to compensate the grantee for any related loss. This is generally considered similar to the covenant for quiet enjoyment, and its benefit also runs with the grantee’s estate. QUESTION ID: P0110 Additional Learning

Question 31

Which of the following best states the result when O does not acquire title to property until after he purported to convey the property to A?

A O will retain title because he lacked capacity to convey the land.

B A will acquire title regardless of the terms of her deed.

C A can acquire title only if she was a bona fide purchaser.

D A can accept title to the land or possibly sue O for breach of covenants for title.

Answer 31

D

When O does not acquire title to property until after he purported to convey the property to A, A can accept title to the land or possibly sue O for breach of covenants for title. Under the doctrine of estoppel by deed, a grantor impliedly covenants that he will convey title upon its acquisition and is estopped to deny that he acquired title on the grantee’s behalf. Alternatively, in many jurisdictions the grantee may opt to sue O for damages for breach of covenants for title, if any (i.e., if a general warranty deed was used), because O lacked title at the time of the conveyance. When O does not acquire title to property until after he purported to convey the property to A, O will NOT retain title because he lacked capacity to convey the land. Instead, the doctrine of estoppel by deed applies. If a grantor purports to convey an estate that he does not then own, his subsequent acquisition of title to the property automatically inures to the benefit of the grantee. When O does not acquire title to property until after he purported to convey the property to A, A will NOT acquire title regardless of the terms of her deed. Estoppel by deed applies to grantees who take by warranty deed (i.e., deeds that contain covenants for title). Additionally, many courts apply the doctrine any time the deed expressly purports to convey a particular estate, regardless of covenants for title. In most states, however, the doctrine will not be applied when the conveyance is by a quitclaim deed—i.e., a deed releasing whatever interest, if any, the grantor has in the property. When O does not acquire title to property until after he purported to convey the property to A, A will NOT acquire title only if she was a bona fide purchaser (“BFP”). A BFP is a purchaser who gives valuable consideration and lacks notice of a prior conveyance. The first grantee’s BFP status is irrelevant to the application of the doctrine of estoppel by deed. QUESTION ID: P0117 Additional Learning