The following discussion is a very elementary discussion of conveyances by deed. It is not intended to be a complete or comprehensive discussion of the topic, but may be helpful for non-lawyers who want to know a little bit more about the topic.
Under modern law, the voluntary conveyance of real estate during one’s lifetime must be done by deed, or else the conveyance is void. Most state laws provide that the deed must have the following parts for it to be valid:
- First, the deed must identify the grantor (Seller) and the grantee (Buyer).
- The deed must describe the property to be conveyed, i.e., the legal description
- There must be some sort of consideration stated;
- There must be operative words of conveyance, such as “grant, bargain and sell”;
- There must be words of delivery, such as “to have and to hold”, which describes the estate that is being taken by the grantee;
- There must be an execution clause, containing the date, the signature of the grantor, and in some states, the signature of witnesses
- There must be an acknowledgement by a notary. While this part is not necessary to actually pass the title, it is necessary in order for the deed to be recorded in the land records;
- And there must be delivery of the deed to the grantee, and acceptance. Recordation of the deed in the land records is generally presumed to satisfy this requirement.
If all of these deed requirements are met, and consideration has been paid and received, then title will be considered transferred to the grantee. It is important to understand that real property law is really old, and is a creature of law and equity, not statute. So, most of our law dealing with real estate comes from old decisions in old lawsuits, much of it from merry old England. When the United States became independent, the states adopted the common law that was in effect in England at the time. So our real property law here in the US dates back before the revolution and independence. It is also important to remember that there is no such thing as federal real estate law. Real estate law is strictly state law based, and the law in one state may not be the law in a neighboring state. That’s why, when you have multi-state transactions you will have lawyers involved from each state, and they will be the ones drafting the deeds and mortgages for the property in that state.
Different types of deeds:
General Warranty Deed: includes a covenant of full warranty from the grantor, who guarantees that he will “warrant and forever defend” the right and title to the real property being conveyed to the grantee against the claims of all persons.
Special Warranty Deeds are used by corporations and other entities who wish to limit their potential liability to only those matters that they have done while they owned the property.
Quit-claim Deeds are used where the grantor doesn’t want any liability for the legal status of the title. Quit-claim deeds are often used to clear up clouds on title, and purport to convey only what interest the grantor may have.
The presumption is that a warranty deed is preferred, and most state forms for deeds will be drafted in order to create statutory warranties. Sometimes, the deed will say: “convey with statutory covenants of warranty”, or “convey with English covenants of Warranty”. Some western states use a Grant Deed, or a statutory form of Bargain and Sale deed, which may be used instead of a General Warranty Deed. The warranties contained in these deeds are set out in state statutes and may not be as broad as those in a General Warranty Deed.
In real estate, it is very important to be a BFP, which stands for “bona fide purchaser for value without notice.” A BFP is someone who has purchased the title to real property and who has no actual or constructive knowledge of any defects, claims or equities against the title of the seller. A BFP is protected under the recording laws against others who may claim the title through fraud. On the other hand, a grantee who takes title by gift or inheritance is NOT a bona fide purchaser, and must be concerned with the possibility of liens and unrecorded interests created by the grantor. In some states, Texas for example, if you take title by a Quit-claim Deed, you cannot be a bona fide purchaser, since there is a presumption that a quit-claim deed is being used to clear up a title defect, or because the grantor cannot give title. Recordation of a Warranty Deed is required in order to protect the BFP status of the grantee.
Caveat: This discussion is meant to be a very general, and not legal, discussion on certain aspects of the law of conveyances. It is not intended to state the law of any particular jurisdiction, is not intended to be a full or complete discussion of the topic, and should not be used as the basis for any lawsuit or judicial interpretation. Any misstatements or errors are solely those of the author, and for which I take full responsibility.
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