Titles

Adverse possession (EACH)

1. Exclusive

2. Actual

3. Hostile

4. Continuous and uninterrupted

1. Continuous and uninterrupted

• Through statutory period (e.g., 10 (many states), 15, or 20 years)

• Seasonal use okay if consistent with type of property (e.g., vacation home)

• Tacking permitted, but no gaps and via nonhostile connections only (e.g., descent, devise, contract, or deed)

• DE Point of Law—possession for 20 years; does not require constant use

2.Actual

—open or notorious physical presence by adverse possession or another whose possession is attributable to adverse possession; constructive adverse possession gives title to whole

Hostile

—must possess land without owner’s permission

• Majority of jurisdictions—ignore subjective intent; instead, must show objective intent to claim land as his own

• Minority of jurisdictions—consider subjective intent:

  • Good faith—must believe property is unowned or that he owns it

  • Bad faith—aggressive trespass

Exclusive

—possession cannot be shared with true owner, but two or more people can adversely possess as tenants in common

Remedies for continuing trespass

DE Distinction—encroachment of building onto adjoining land is continuing trespass; owner may (1) remove encroachment from land, (2) sue for damages, or (3) bring ejectment action

Delivery of the Deed

• At time of transfer, grantor must intend to make present transfer of property interest to grantee

  • Typically, intent is shown by delivery of deed

  • Execution and recording—creates rebuttable presumption that deed is presently operative

  • Parol evidence—admissible to establish intent when grantor keeps deed

• DE Distinction—deed must be delivered during grantor’s lifetime

• Transfer to grantor’s agent is not delivery, but transfer to grantee’s agent is

• Transfer to third party with condition is not delivery if grantor keeps absolute right to recover deed, but if not, treated like future property interest

  • DE Distinction—deed given to third party to hold until future condition or event is delivered as an escrow; it cannot become enforceable as deed until condition or event occurs. If it was not intended to take effect immediately (i.e., delivered for safekeeping), deed is invalid and unenforceable.

• If conditioned upon death, grantor must intend to make present gift

• Acceptance presumed for beneficial transfers

Deed

• Many states allow real estate brokers to prepare real estate sales contracts; some states limit this to form contracts, and some require attorney review

  • Nonattorneys may prepare mortgage lending documents

  • Jurisdictions are split as to requirement of attorney at closing, but nonattorney may not answer legal questions

  • DE Distinction—an attorney must participate in (1) settlement and (2) certain drafting and title-related activities

Valid deed requirements

• Identified parties

• Grantor’s signature

• Words of transfer

• Reasonably definite property description (extrinsic evidence admissible)

• DE Distinction—extrinsic evidence not admissible if meaning is clear within deed

• DE Distinction—valid deed must contain (1) grantor’s and grantee’s names, (2) recital of consideration, (3) words of conveyance, (4) description of conveyed land, (5) recital of title, (6) notarized signature of grantor, and (7) date

Agent may execute deed

Equal-dignities rule—agency authorization for real estate contracts must be in writing

Recording acts

1. Pure Notice

2. Pure Race

3. Race Notice

Pure Notice

• Bona fide purchaser; purchaser for value without notice) of prior interest prevails over prior grantee who failed to record

• Must record against subsequent purchaser (e.g., “no conveyance or mortgage of real property good against subsequent bona fide purchaser unless same be recorded according to law”)

Pure Race

• First to record prevails, regardless of knowledge of prior conflicting interests (e.g., “no conveyance or mortgage of real property good against subsequent purchaser of value unless first recorded by law”)

• DE Distinction—DE has a race statute

Race notice

Subsequent bona fide purchaser protected only if he takes without notice and is first to record (e.g., “no conveyance or mortgage of real property good against subsequent bona fide purchaser unless first recorded by law”)

Notice

—tested as of time of conveyance; notice obtained after conveyance does not prevent purchaser from benefiting from recording

• DE Point of Law—judgment liens generally expire after 10 years; judgment creditor must begin execution efforts within 5 years of judgment

Actual Notice

—grantee with actual, personal knowledge of prior interest cannot prevail under notice or race-notice statute

Inquiry Notice

—if reasonable investigation would disclose prior claims, grantee cannot prevail against them (e.g., someone other than grantor has possession or documents referenced in chain of title)

Record Notice

—properly recorded and appears in chain of title

Title insurance

—protects policy holder (owner or lender) against defects that could have been uncovered by careful title search or forged, undeliverable, or unenforceable deeds

Types of deeds

• General warranty

• Future covenants

• Special warranty

General warranty - Present covenants

• Seisin—grantor owns land as described in deed

• Right to convey—grantor has right to transfer title

• Against encumbrances—no undeclared encumbrances against land

General warranty - Future covenants

• Quiet enjoyment—grantee not disturbed in possession by third party’s lawful claim

• Warranty—grantor will defend grantee against third party’s claim

• Further assurances—grantor will do whatever future acts reasonably necessary to pass title if later determined title is imperfect

Special warranty

—same covenants of title as general warranty deed, but only warrants against defects arising during time grantor has title

• DE Point of Law—words “grants and conveys,” unless specifically restricted, create special warranty

Quitclaim deed

—no covenants of title

Conveyance By will

—specific devise or residuary clause

Conveyance by Ademption

—devise of real property fails because testator no longer owns property upon death

Lapse

—devise of real property can also fail if beneficiary named in will dies before testator and no alternative beneficiary is named

• Anti-lapse statute—prevents gift from lapsing if gift is made to individuals specified by statute and they leave issue who survive testator

By operation of law

—intestate succession

By trust

Trust—fiduciary relationship in which one or more trustees are called upon to manage, protect, and invest certain property and any income generated from trust for benefit of one or more named beneficiaries

• Inter vivos trust—created when settlor conveys his property (res) to trustee while settlor is alive

• Testamentary trust—created by settlor in his will

• Pour-over trust—created by settlor during his life but not funded until his death by devise in his will

Restraint on legal interests

• Disabling restraint

• Forfeiture restraint

• Promissory restraint

• Prohibited restraints

• Permissible restraints

Disabling restraint

—total prohibition on transfer of property interest by its owner; always void

Forfeiture restraint

—property is forfeited if interest owner attempts to transfer his interest; restraint on future interest or life estate can be valid

Promissory restraint

—promise by property interest holder not to transfer property interest; enforceable by injunction or suit seeking damages; restraint on life estate can be valid

Prohibited restraints

—absolute restraint on alienation of FS is void; any restraint based on race, ethnicity, or religion is not enforceable

Permissible restraints

—restraints on use of property (e.g., covenants) are generally permissible

Restraint on equitable interests

—restriction on transferability of equitable property interest, such as spendthrift clause, is valid