Transfer of Title Flashcards
Legal Title
someone who possesses all ownership interests
Equitable Title
the interest or right to obtain legal title to a property in accordance with a sale or mortgage contract between the legal owner and a buyer or creditor.
Actual Notice
The term “notice” is synonymous with “knowledge.” A person who has received actual notice has actual knowledge of something. Receiving actual notice means learning of something through direct experience or communication. In proving real estate ownership, a person provides actual notice by producing direct evidence, such as by showing a valid will. Another party receives actual notice by seeing direct evidence, such as by reviewing the deed, reading title records, or physically visiting the property to see who is in possession. Thus if Mary Pierce drives to a property and sees directly that John Doe is in possession of the home, Mary then has received actual notice of John Doe’s claim of ownership. Her knowledge is obtained through direct experience.
Constructive Notice
Legal Notice
is knowledge of a fact that a person could have or should have obtained. The foremost method of imparting constructive notice is by recordation of ownership documents in public records, specifically, title records. Since public records are open to everyone, the law generally presumes that when evidence of ownership is recorded, the public at large has received constructive notice of ownership. By the same token, the law presumes that the owner of record is in fact the legal owner.
Alienation
Transfer of title to real estate
Conveyance
When the transfer uses a written instrument
Voluntary Alienation
an unforced transfer of title by sale or gift from an owner to another party.
Public Grant
If the transferor of a title is a government entity and the recipient is a private party
Private Grant
If the transferor of a title is a private party
Involuntary Alienation
a transfer of title to real property without the owner’s consent. Involuntary alienation occurs primarily by the processes of descent and distribution, escheat, foreclosure, eminent domain, adverse possession, and estoppel.
Grantor
An owner of a deed
Grantee
Recipient of deed
Delivery & Acceptance
It is necessary for the deed to be delivered to and accepted by the grantee for title to pass. To be legally valid, delivery of the deed requires that the grantor
- be competent at the time of delivery
- intend to deliver the deed, beyond the
act of making physical delivery
Validity of the grantee’s acceptance requires only that the grantee have physical possession of the deed or record the deed.
Once accepted, title passes to the grantee. The deed has fulfilled its legal purpose and it cannot be used again to transfer the property.
Deed Validity Requirements
- be delivered and accepted
- have a competent grantor and legitimate grantee
The grantor must be living, of legal age, and mentally competent. If grantor is a corporation, the signing party must be duly authorized. The grantee must be living or have legal existence, but need not be of legal age or mentally competent. - be in writing
- contain a legal description
- contain a granting clause
The deed must express the grantor’s present desire and intention to transfer legal title to the grantee. - include consideration
The deed must be accompanied by valuable (monetary) or good (love and affection) consideration, but the amount need not reflect the actual price in most cases. - be signed by the grantor
The deed must be signed by the grantor, but need not be signed by the grantee unless the deed contains special provisions requiring the grantee’s acceptance. Grantors may give power of attorney to other parties, authorizing them to execute deeds on their behalf. The power of attorney authorization should be recorded to ensure a valid conveyance. - be acknowledged
The grantor must declare before a notary or other authorized person that the grantor’s identity and signature are genuine, and that the deed execution was a free, voluntary act. The grantor then receives a certificate of acknowledgment signed by the notary. Some states require acknowledgment to complete a valid conveyance. Most states require it before they will record the deed. A deed without an acknowledgement, therefore, tends to endanger one’s claim to a property.
Recording
Recording is not necessary to make a deed valid. However, it is in the grantee’s best interests to do so. Recording the deed gives the public constructive notice of the grantee’s ownership.
Conveyance Clauses
describe the details of the transfer. The principal conveyance clauses are:
- Granting Clause, or Premises Clause
- Habendum Clause
- Reddendum Clause, or Reserving Clause
- Tenendum Clause
Granting Clause
Premises Clause
the only required clause; contains the conveyance intentions; names the parties; describes the property; indicates nominal consideration
Habendum Clause
describes the type of estate being conveyed (fee simple, life, etc.)
Reddendum Clause
Reserving Clause
recites restrictions and limitations to the estate being conveyed,
e.g., deed restrictions, liens, easements, encroachments, etc.
Tenendum Clause
identifies property being conveyed in addition to land
Covenant or Warrant Clauses
Covenant clauses present the grantor’s assurances to the grantee. A deed of conveyance usually contains one or more of the following covenants, depending on the type of deed.
- Warrant of Seisin
- Warrant of Quiet Enjoyment
- Warrant of further assurance
- Warranty forever; Warranty of title
- Warrant of encumbrances
- Warranty against grantor’s acts
Warrant of Seisin
assures that the grantor owns the estate to be conveyed, and has the right to do so
Warrant of Quiet Enjoyment
assures that the grantee will not be disturbed by third party
title disputes
Warrant of Further Assurance
assures that the grantor will assist in clearing any title problems discovered later
Warranty Forever
Warranty of Title
assures that the grantee will receive good title, and that grantor will assist in defending any claims to the contrary
Warrant of Encumbrances
assures that there are no encumbrances on the property except those expressly named
Warranty Against Grantor’s Acts
states the assurance of a trustee, acting as grantor on behalf of the owner, that nothing has been done to impair title during the fiduciary period
Statutory Deeds
the covenants are defined in law and do not need to be fully stated in the deed.
Bargain & Sale Deed
the grantor covenants that the title is valid but may or may not warrant against encumbrances or promise to defend against claims by other parties. If there is a warrant of defense, the deed is a full warranty bargain and sale deed.
The overall bargain and sale covenant is: “I own, but won’t defend.”
General Warranty Deed
Warranty Deed
It contains the fullest possible assurances of good title and protection for the grantee. The deed is technically a bargain and sale deed in which the grantor promises to defend against any and all claims to the title.
The overall general warranty covenant is: “I own and will defend.”
Special Warranty Deed
the grantor warrants only against title defects or encumbrances not noted on the deed that may have occurred during the grantor’s period of ownership or trusteeship. The deed does not protect the grantee against claims that predate the owner’s period of ownership. Special warranty deeds are often used by trustees and grantors who acquired the property through a tax sale. The overall special warranty covenant is: “I own and will defend against my acts only.”
Quitclaim Deed
transfers real and potential interests in a property, whether an interest is known to exist or not. The grantor makes no claim to any interest in the property being conveyed and offers no warrants to protect the grantee.The quitclaim is typically used to clear title rather than convey it. Where there is a possibility that prior errors in deeds or other recorded documents might cloud (encumber) the title, the relevant parties execute a quitclaim deed to convey “any and all” interest to the grantee. The overall quit claim covenant is: “I may or may not own, and I won’t defend.”
Cloud
Encumber
Quiet Title Suit
requires the lienor to prove the validity of an interest. If the defendant is unable to do so, the court removes the cloud by decree.
Special Purpose Deeds
one tailored to the requirements of specific parties, properties, and purposes.
Personal Representative’s Deed
used by an executor to convey a decedent’s estate; also called an executor’s deed
Guardian’s Deed
used by a court-appointed guardian to transfer property of minors or mentally incompetent persons
Sheriff’s Deed
used to convey foreclosed property sold at public auction
Deed of Trust
used to convey property to a third party trustee as collateral for a loan
Reconveyance Deed
to convey the property back to the borrower
Deed in Trust
used to convey property to the trustee of a land trust. not to be confused with deed of trust
Master Deed
used to convey land to a condominium developer; accompanied by the condominium declaration when recorded
Partition Deed
used to convey co-owned property in compliance with a court order resulting from a partition suit; a partition suit terminates an estate when one or more co-owners want to dissolve their relationship and are unable to do so without the assistance of a court.
Patent Deed
used to transfer government property to private parties
Tax Deed
used to convey property sold at a tax sale
Documentary Stamp Tax
State law usually requires payment of a documentary stamp tax on a conveyance of real property. The tax is based on the actual price of the property conveyed, thus enabling taxing authorities to ascertain current market value for ad valorem tax purposes. Payment of the tax is evidenced on the deed.
A Will
A Last Will & Testament
a legal instrument for the voluntary transfer of real and personal property after the owner’s death.
Testator
Maker of a will
Devisor
Wants the property distributed
Heir
Devisee
Beneficiary of a will
Amendatory Instrument
A will that can be changed at any time during the maker’s lifetime.
Executor
Oversees settlement of estate
Witnessed Will
in writing and witnessed by two people
Holographic Will
in the testator’s handwriting, dated and signed
Approved Will
on pre-printed forms meeting the requirements of state law
Nuncupative Will
made orally, and written down by a witness; generally not valid for the transfer of real property
Will Validity Requirements
- the testator be of legal age and mentally competent
- the testator indicate that the will is the “last will and testament”
- the will be signed
- the completion of the will be witnessed and signed by the witnesses
- the will be completed voluntarily, without duress or coercion
Probate
A court proceeding that generally settles a decedent’s estate
Testate
having left a valid will
Intestate
having failed to leave a will
Probate Court’s Objectives
- validate the will, if one exists
- identify and settle all claims and
outstanding debts against the estate - distribute the remainder of the estate to the rightful heirs If the will does not name an executor, the court will appoint an administrator to fulfill this role.
Laws of Descent
The state’s statutes of descent and distribution identify heirs and the respective shares of the estate they will receive. In the absence of heirs, title transfers to the state or county by escheat.
Abandonment
Property that has been abandoned for a statutory period may also escheat to the state or county.
Foreclosure
A property owner who fails to fulfill loan obligations or pay taxes may lose an estate through foreclosure
Eminent Domain
Various government and public entities can transfer private property to the public sphere by the power of eminent domain. The transfer is involuntary, even though the owner receives compensation. For example, a city government wants to widen a highway to accommodate growth. The government uses eminent domain to condemn and purchase all properties abutting the thoroughfare in order to complete the construction project.
Adverse Possessor
someone who enters, occupies, and uses another’s property without the knowledge or consent of the owner, or with the knowledge of an owner who fails to take any action over a statutory period of time.
To claim legal title, the adverse possessor must:
- be able to show a claim of right or color of title as reason for the possession
- have notorious possession, which is possession without concealment
- maintain a consistent claim of hostile possession, which is a claim to ownership and possession regardless of the owner’s claims or consent
- occupy the property continuously for a statutory period of time
- in some states, pay taxes
Claim of Right
based on the adverse possessor’s occupying and maintaining the property as if he or she were the legal owner.
Color of Title
results when a grantee has obtained defective title, or received title by defective means, but occupies the property as if he or she were the legal owner. A court may hold that a claim of right or a claim of colored title is a valid reason for the possession.
Notorious Possession & Hostile Possession
give constructive notice to the public, including the legal owner, that a party other than the legal owner is occupying and claiming to own the property. It is possible for such notice to prevail over notice by recordation as the dominant evidence of legal ownership, provided the possessor has occupied the property continuously for the statutory period of time.
In some states, the possessor must have paid taxes over a prescribed period to obtain title. However, if the possessor has paid rent of any kind, the claim of ownership might be refuted.
Avoiding Adverse Possession
An owner can avert the danger of involuntary alienation by adverse possession by periodically inspecting the property within statutory deadlines and evicting any trespassers found. The owner may also sue to quiet title, which would eliminate the threat of the adverse possessor’s claim to legal title.
Estoppel
prevents a person from claiming a right or interest that is inconsistent with the person’s previous statements or acts. As a basis for involuntary alienation, the doctrine of estoppel can prevent an owner from re-claiming a property that was transferred under false pretenses. For example, an owner conveys a property with a defective title. The grantor is fully aware of the defect but makes no disclosure to the grantee. The grantor later cures the defect and then claims to be the rightful owner of the property on the basis of the effort and expense of clearing the title. Estoppel disallows the grantor’s claim because of the prior conveyance action. The grantee remains legal owner and benefits from the cleared title as well.
Title Records
contain a history of every parcel of real estate in the county, including names of previous owners, liens, easements, and other encumbrances that have been recorded.
Public Notice
Title records protect the public by giving all concerned parties constructive notice of the condition of a property’s legal title: who owns the property, who maintains claims and encumbrances against the property.
Buyer Protection
Title records protect the buyer by revealing whether a property has marketable title. The buyer is legally responsible for knowing the condition of title, since it is a matter of public record. Recording a transaction also protects a buyer by replacing the deed as evidence of ownership.
Marketable Title
one free of undesirable encumbrances.
Lienholder Protection
Title records protect the lienholder by putting the public on notice that the lien exists, and that it may be the basis for a foreclosure action. Recording also establishes the lien’s priority
Chain of Title
the succession of property owners of record dating back to the original grant of title from the state to a private party.
Clouded Title
If there is a missing link in the chronology of owners, or if there was a defective conveyance, the title chain is said to be broken
Suit to Quiet Title
clears the title record of any unrecorded claims.
Abstract of Title
a written, chronological summary of the property’s title records and other public records affecting rights and interests in the property. It includes the property’s chain of title and all current recorded liens and encumbrances, by date of filing.
Title Search
A title abstractor or title company analyst conducts the search of public records needed to produce an abstract. Insurers and lenders generally require the search to identify title defects and ascertain the current status of encumbrances.
Recording System
Each state prescribes procedures and requirements for recording in public title records: forms, proper execution, acknowledgment, and witnessing.
Title Evidence
Since the value of a property is only as good as the marketability of its title, the evidence supporting the status of title is a significant issue. To demonstrate marketable title to a buyer, a seller must show that the title is free of
- doubts about the identity of the current owner
- defects, such as an erroneous legal description
- claims that could affect value
- undisclosed or unacceptable encumbrances
Principal Forms of Title Evidence
- a Torrens certificate
- a title insurance policy
- an attorney’s opinion of the title abstract
- a title certificate
Title Insurance
A title insurance policy indemnifies the policy holder against losses arising from defects in the insured title.
Binder
Commitment to insure
Title Certificate
a summary of the condition of title as of the date of the certificate, based on a search of public records by an abstractor or title analyst. The certificate does not guarantee clear title against defects, unrecorded encumbrances or encroachments.
