Section 3: Acquiring Title to Real Property Flashcards
A Brief History of Deeds:
* When it comes time to buy and sell Real Property, historically, there has been a need to show proper evidence of who owns the property and does that person have the legal right to sell it, give it away, encumber it, trade it or otherwise ______ it.
* In the Feudal times, the seller of property would in the presence of witnesses, transfer a piece of the ground itself, an amount of soil, a twig, key, or other symbol, in the literal sense of a hand-to-hand passing and acknowledgement.
Alienate
A Brief History of Deeds:
* _____ = The act of transferring real property from one person to another.
* Fast forward to the mid 1500’s and the Statute of Uses become accepted and allowed sellers to transfer title with a “written” instrument, instead of the old customs.
Alienation
A Brief History of Deeds:
* Finally in 1677 under English Law (England), the “______” became common law and mandated that all real property that is conveyed MUST BE IN WRITING and the term Deed became widely used.
* This is still used today, a conveyance of real property must be in WRITING to satisfy this statute.
Statute of Frauds
______ = A written legal document that is signed and delivered and is used to convey
the ownership of real property and legal rights to another.
o MUST be Signed by the Grantor (Giv-OR) of the real property
o Must be Delivered to the new Grantee (Receiv-EE) of the real property
o The grantee does NOT need to sign this document, ONLY the grantor
Deed
- What is a Deed?
- The deed is the “Written Evidence” of the transfer (Think of it as a receipt for a purchase).
- As a carryover from the past, Deeds must still have several items to be considered valid, remember that the deed must be ‘__________’.
- Since we use escrow and title companies most often in Arizona, delivery of a deed is commonly sent by certified mail or by personal delivery to the grantee by the escrow agent at time of signing.
Signed, Sealed & Delivered
- _____ = The legal process of transferring “real property from one owner to another – not title.
- A Deed is the written document or instrument that is used to “convey” real property, the real estate or land
IMPORTANT: Notice we said NOT TITLE!! This is a HUGE CONCEPT you will learn soon
Conveyance
- What is a Deed?
______ = A form of voluntary alienation where by the owner of property deeds ‘dedicates’ the lands that are needed for roads, sewers, waterlines, and other utilities to the government as part of a land development.
Dedication
Types of Deeds:
* Deeds can vary and differ according to the “covenants” or types of warranties made by the grantor of the deed:
o The ______, is the most common type of deed used in Arizona as it offers the most protections, warranties or covenants (Voluntary). (It is a transfer or ownership done voluntarily usually)
Warranty Deed Or General Warrant Deed
Types of Deeds:
* Deeds can vary and differ according to the “covenants” or types of warranties made by the grantor of the deed:
o The _____ is commonly used by LLC’s, corporations, trusts, and
builders to grantees because it limits responsibility for claims to only that time which they owned it. It has the same covenants as the general warranty deed but it’s limited to only when the grantor owned or was in possession of the property (Flippers, Trusts, Wholesalers, ect).
Special Warranty Deed
Types of Deeds:
* Deeds can vary and differ according to the “covenants” or types of warranties made by the grantor of the deed:
o The ______ is the weakest protection for grantees as it only warrants that the grantor has the RIGHT TO CONVEY the property and property is encumbrance free except those that are already identified in the deed. Most deeds obtained from sheriff sale, tax sale, foreclosures etc. will issue a bargain and sale deed.
Bargain and Sale Deed
Types of Deeds:
* Deeds can vary and differ according to the “covenants” or types of warranties made by the grantor of the deed:
o The ______ actually quits or gives up a person’s interest in real property which means that there are zero warranties or covenants. This is used extensively when a property has a ‘cloud’ on title and a grantor will sign a quitclaim to remove that cloud (Divorce where one party ‘quits or gives up’ their interest in the property).
Quitclaim Deed
Types of Deeds:
* Deeds can vary and differ according to the “covenants” or types of warranties made by the grantor of the deed:
o The _____ = is the type of deed given to a party who is the successful bidder at foreclosure auctions in states that use Trust Deeds and not Mortgages.
Trustee’s Deed
Types of Deeds:
* Deeds can vary and differ according to the “covenants” or types of warranties made by the grantor of the deed:
o The ______ will be used when a married couple wants to keep property separate from the spouse but needs the spouse to acknowledge they don’t have ‘interest’ in the title so that party will sign a disclaimer deed.
Disclaimer Deed
Types of Deeds:
* Deeds can vary and differ according to the “covenants” or types of warranties made by the grantor of the deed:
o The _____ will be used to convey special circumstances; gift deed, court ordered deed, court appointed (seized property) deeds are examples.
Special Purpose Deed
Why A General Warranty Deed Is Best:
o The “General Warranty Deed” offers the most covenants to the grantee and includes:
The ______ = This covenant promises that the grantor owns the property and has the right to convey it.
Covenant of Seisin
Why A General Warranty Deed Is Best:
o The “General Warranty Deed” offers the most covenants to the grantee and includes:
The ______ = This promises the grantor will defend the grantee against all claims made by third parties.
Covenant of Quiet Enjoyment
Why A General Warranty Deed Is Best:
o The “General Warranty Deed” offers the most covenants to the grantee and includes:
The ________ = This promises the property is free from encumbrances other than those identified in the deed.
Covenant Against Encumbrances
Why A General Warranty Deed Is Best:
o The “General Warranty Deed” offers the most covenants to the grantee and includes:
The _____ = This promises the grantor will compensate the grantee for a loss if the title fails at any time.
Covenant of Warranty of Title
Why A General Warranty Deed Is Best:
o The “General Warranty Deed” offers the most covenants to the grantee and includes:
The ______ = This promises the grantor will obtain and deliver any instrument needed to make title good.
Covenant of Further Assurance
What makes a Deed Legitimate:
* If you remember that the deed must be ‘signed, sealed and delivered’ it will help you understand the basic understanding of what necessitates a legal deed. The full list of requirements that ensure a clean and valid deed are:
- Must be ______ by the grantor
- Must be ______ to the grantee
- The _____ must be included in the deed
- Must be ______ as prescribed by the county where the transfer takes place
- Must clearly state on the document that it is a ______
- Must identify the fact that this ______ will be used to convey ownership rights
- A deed must have some form of ______ attached to it, which could be a dollar amount, or something else that has value, like “for my love and affection” (Arizona nominal value of this is $10 - Ten Dollars)
- Signed
- Delivered
- Legal Description
- Witnesses
- Deed
- Instrument
- Valid Consideration
What makes a Deed Legitimate?
* If you remember that the deed must be ‘signed, sealed and delivered’ it will help you understand the basic understanding of what necessitates a legal deed. The full list of requirements that ensure a clean and valid deed are:
1. 2. 3. 4. 5. 6. 7.
- Must be signed by the grantor
- Must be Delivered to the grantee
- The legal description must be included in the deed
- Must be witnesses as prescribed by the county where the transfer takes place
- Must clearly state on the document that it is a Deed
- Must identify the fact that this instrument will be used to convey ownership rights
- A deed must have some form of valid consideration attached to it, which could be a dollar amount, or something else that has value, like “for my love and affection” (Arizona nominal value of consideration is $10 - Ten Dollars)
Why Could a Deed NOT be Valid in Arizona:
* Challenges to deeds are often settled with the help of title insurance companies enforcing guarantees found in deeds.
o A forged or falsified deed is void and NOT valid.
o If a deed were issued to a false person or entity.
o A deed could be voided if the person’s ______ isn’t consistent on the deed.
Name
Why Could a Deed NOT be Valid in Arizona:
* Challenges to deeds are often settled with the help of title insurance companies enforcing guarantees found in deeds.
o A deed must not be left ______ – it must have a GRANTEE or is VOID (think car title transfer in AZ, it must be signed by the “receiv-ee” of the car, same as the house).
o The grantor must be of “sound mind and body” which means that they can’t be under the influence of drugs, alcohol, duress or other mental strains (could be void).
Blank
Why Could a Deed NOT be Valid in Arizona:
* Challenges to deeds are often settled with the help of title insurance companies enforcing guarantees found in deeds.
o Anytime a minor enters into a contract, that contract is void (however, if a deed were to be given to a minor, this is valid -parents will leaves property to children).
o Mental Capacity is challengeable and is often seen in headlines, by Arizona law, Only the _____can deem a person fit or insane.
Courts
- ______ = the right of ownership of property and evidence of such rights.
- Shows proof that whoever has the “title” is in fact the owner. THIS IS THE CONCEPT, Deed is the Paper.
IMPORTANT: RIGHTS TO PROPERTY IS A CONCEPT
Title
- There are (4) Four ways in which someone can transfer “TITLE” to another:
o _____ = WITH full consent of the legal owner - Could be an open sale, a donation or gift or even a barter or trade
Voluntarily
- There are (4) Four ways in which someone can transfer “TITLE” to another:
o ______ = WITHOUT the full consent of the owner - Foreclosures, court action, tax upset sale, government, adverse possession
Involuntarily
- There are (4) Four ways in which someone can transfer “TITLE” to another:
o ______ = The legal transfer of title because of death and instructions found in will - A property could be inherited, this isn’t by choice, but by will of the deceased
Will
- There are (4) Four ways in which someone can transfer “TITLE” to another:
o ______ = Transfer of property left when someone dies intestate or without a will - Property will pass onto the heirs by the Statutes of _____ in Arizona.
Descent
- Contrary to popular beliefs, the deed does not have to be ______, but it is common that all deeds are to give constructive notice to the public.
- By doing this, the public has the ability to view (recorder office) who has ‘title’ and thus claims to ownership of real property – by looking for deeds that were recorded.
Recorded
Recordation:
* Because over 90% of the deeds are in fact recorded, the general public has the ability to search the recorders office for recorded deeds.
* By doing a title search and creating and “______” you are going back into the recorded history of a certain real property and looking for the chain of title.
Abstract of title
Recordation:
o ______ = is notice that is given to the general public at large.
o The general public can search recorded records and as such, they are informed.
Constructive Notice
Recordation:
_______ = Constructive Notice
Recording
Recordation:
o _______ = is delivered in such a way as to give legally sufficient assurance that actual knowledge of the matter has been conveyed to the recipient
o This type of notice would be reserved for a notice that has been given to a singular person, think of a process server, you have been “served” is giving this Notice of something.
Actual Notice
Recordation:
* ______ = the written history of the title
* In hopes of determining the marketability of title, title and escrow companies will perform the title search and will look for missing links, evidence of errors, ownership etc.
Abstract Of Title
Recordation:
* If there is an ________, it can easily challenge legal ownership of the current property owner since the public has no knowledge of it = how to prove it?
* These deeds have weaker claims because they may have errors or missing components as well as the fact that they may not been legally delivered to the grantee.
Unrecorded deed
Recordation:
IMPORTANT
Title = ______ & Deed = Document
Concept
Original Title:
* In most cases title to land is originally held by the state.
o The states could obtain title from discovery, war/conquest, purchase or other treaties.
o The United States purchased over 45,000 square miles of land in New Mexico and Arizona in _____ for $10,000 from Mexico.
1853
Original Title:
The first time land is transferred from a state to an individual the transfer uses a patent.
o _______ = the instrument used to transfer land form a government body to individuals.
o _______ = title that belongs to either a corporation, individual or other entity that was derived from the government’s original title.
Patent
Derivative Title
Original Title:
The first time land is transferred from a state to an individual the transfer uses a patent.
o ______ = the instrument used to transfer land form a government body to individuals.
Patent
Original Title:
The first time land is transferred from a state to an individual the transfer uses a patent.
o ______ = title that belongs to either a corporation, individual or other entity that was derived from the government’s original title.
Derivative Title
Title Issues:
* Normally, it’s possible to put together a “chain” of owners or a history of the property since nearly all liens, deeds and other important documents are recorded.
* By discovering possible issues in advance of the conveyance, both grantors and grantees have a more complete understanding of the marketability and or risks of their title.
* Remember! _____ = Giv-or of the deed and the ______ = Receiv-ee of the deed.
Grantor
Grantee
Title Issues:
By producing an in depth abstract of title, escrow companies can produce evidence that the title is free from defects – clean – or possibly show clouds on title or worse, unknown defects:
o Unknown liens or other encumbrances
o Evidences of fraud or forgery
o Missing ownership history
This is known as a ______.
Marketable Title
Title Issues:
This is a title that is complete and has no errors found.
Clear Title
- ______ = a type of involuntary alienation or giving up of a property whereby an unauthorized person who does not hold legal title to a property can in fact obtain legal title and rights.
Adverse Possession
A trespasser or squatter can claim ______ if they can prove that they had continuous, hostile, actual, visible, exclusive and full possession of the property.
* Evidence is given to everyone including the actual owner that someone else is using their property and if no forcible removal ensues, after a set time, squatters can claim ownership.
* After a predefined time, squatters can file in a court for full legal rights and ownership.
Adverse possession
Adverse Possession:
_____ = is a term used when one squatter uses someone else previous adverse possession time to include their time for the adverse possession.
* To claim legal title, the possessor must be able to show a claim of right or “color of
title”.
Tack On
Adverse Possession:
_____ = is a term used when one squatter uses someone else previous adverse possession time to include their time for the adverse possession.
Tack On
Adverse Possession:
______ = Title that may have the appearance of good and valid title to property, as if someone had paid taxes for 3 year and continuously occupied someone else’s property.
Color of Title
Adverse Possession:
In Arizona, to claim ______, 3 years of continuous use must be held and the claimant MUST have paid the taxes on the property with a record of payment.
* If someone did NOT pay the taxes, the duration of continuous use in AZ is 10 Years.
Adverse Possession
Inquiry Notice:
IMPORTANT: * Anytime someone is interested in purchasing or acquiring real property, they are _______ responsible by law for making actual inquiry.
o The law presumes most right minded people would inquire about making purchases with regards to real property.
* Example:
o A land prospector buys land sight unseen from a real estate auction website.
The buyer never visited the property and one day is served notice of claim by adverse possession by a squatter who has been living on the property for the past 15 years, in this case the buyer failed to use reasonable diligence and inquire.
Ultimately
Timeshare Ownership in Arizona:
* Timeshares offer a unique set of ownership rules whereby a singular property, or a unit in a development is divided up into ______ ownership units and sold individually.
* Most often, units are divided into 52 units and sold by the week – some timeshares in Scottsdale are divided into 8 week units or 12 week units.
* IMPORTANT: To sell timeshares in Arizona, you must have a real estate license as this is an individually deeded interest in real property.
* Remember this: Any property that has a deed used to convey ownership, a real estate licensee would be required to assist in the conveyance if a commission were to be paid by either party!
Fractional
Definition of Fractional Ownership in Arizona:
* Arizona Revised Statutes title 33 states that a timeshare estate must clearly outline the rights of the owners and the associated rights of use in the complex.
* “______”, an owner has a deed, title, and right to occupy for an agreed time each year, usually the same week or period.
Interval or Timeshare Ownership
Definition of Fractional Ownership in Arizona:
* “_______” is based on a ‘license to use’ or some other form of agreement
while the owner / developer retains the deed and full ownership of the units.
Vacation Ownership
Definition of Fractional Ownership in Arizona:
REMEMBER
Vacation Ownership = a license to use, not own & ______ Ownership is an estate, deeded property.
Timeshare
Fractional Ownership and Timeshare Deeds:
* Any time deeded property is transferred, the deed must also contain what amount of ownership interest in the property must be written out clearly.
* In Arizona, our deeds may contain a _______ clause.
Habendum
Fractional Ownership and Timeshare Deeds:
______ Clause = To Have and to Hold (translated from Latin)
IMPORTANT: This Clause clearly states the interest or amount of the estate being conveyed by the deed if it is less than fee simple (whole).
* This clause would specify the owner’s rights and the limitations on those rights also and is commonly found in condos, patio homes, PUD’s, and yes, timeshare ownership.
Habendum Clause
Arizona HOA’s (Homeowners Associations):
In many communities around Arizona, there are HOA’s or Homeowner Associations set up where every house or property unit is required to adhere to, follow and maintain the CC&R’s = ______.
Covenants, Conditions and Restrictions
Arizona HOA’s (Homeowners Associations):
* ______ = A basic savings account for HOA’s reserved for larger projects in the future. Many times, the new owners will have to pay a ‘Capital Contribution Fee’ that goes to pad this reserve for the HOA.
* When a new community is built, builders/developers will draft a set of rules or CCR’s that all future owners will have to abide by.
Home Owner’s Association Reserve Requirement
Arizona HOA’s (Homeowners Associations):
HOA’s can be either self-managed or managed by an outside 3rd party but almost all HOA’s have a board and elect officers as members of that board from inside the community.
IMPORTANT: Board members MUST reside in the community.
o Responsible for ______ management.
o Budgeting of the association.
o Holding of scheduled meetings.
o Issuing and hearings on fines, violations and penalties.
Vendor
Arizona HOA’s (Homeowners Associations):
Even though HOA’s are in charge of all operations in a community, these HOAs are required to operate within their bylaws and state laws which will supersede bylaws.
o It is now illegal for a community or an HOA to prohibit the use/placement of real estate for sale or for lease SIGNS.
o ______: An association shall not prohibit the installation or use of a solar energy device.
Solar Exemption
