Chapter 12: Transfer Of Title

Title

____to real estate means the right to ownership or actual ownership of the land. Represents owners bundle of rights and also serves as evidence of that ownership. Title equals ownership.

Deed

The written instrument by which an owner of real estate intentionally conveys the right, title, or interest in a parcel of real estate to someone else.

All deeds must be in writing

document by which the owner transfers, the title to another is the deed. Must be recorded to give public notice of new ownership.

Transfer Of Title

Real Estate may be transferred voluntarily by sale or gift. It may also be transferred involuntarily by operation of law. Maybe transferred at any time while the owner lives or by will.

Voluntary Alienation

The legal term for the voluntary transfer of title. Owner may transferred title by making a gift or selling the property. Must use deed of conveyance.

Requirements for a valid deed

Grantor (legal capacity to sign deed) buyer

Grantee (named with certainty) seller

Recital of consideration (property value)

Granting clause

Accurate legal description

Any relevant exceptions or reservations

Signature of the grantor

Delivery of deed and acceptance by grantee

Grantor

Person who is granting the deed, seller

Must be a lawful age at least 18 years old. (Voidable if by minor)

Grantors must be of sound mind and legally competent

Name must be spelled correctly and consistently throughout deed.

Grantee

Person who is accepting deed, buyer. To be valid, a deep must name a grantee. Must be specifically named so that the property that is being conveyed can be identified from deed. GRANTEE DOESNT SIGN

Assumed if no ownership form selected

Tenant in common

(Tenant IS assumed)

Consideration

Valid deed must contain a clause acknowledging that the grantor has received consideration, stated in dollars. When real estate is a gift, love and affection can be considered consideration.

Granting Clause

Deed must contain one, aka words of conveyance. States grantors intention to convey property. Wording creates type of deed.

Granting cause Language

Convey and warrant = warranty deed

Remise, release, alienate, convey = special warranty deed

Grant, bargain, sell = bargain and sale deed

Remise, release, quitclaim = quitclaim deed

Legal Description of Real Estate

To be valid, a deep must contain an accurate legal description of the real estate being made. Land is considered accurately described if competence can locate property.

Exceptions and Reservations

Valid deed must specifically note any encumbrances, reservations, or limitations that affect the title being conveyed. This might include such things as restrictions and easements that run with the land.

In addition to siding existing and circumferences, a grantor may also place certain restrictions or reserve land for grantors use

Private restrictions must be stated in deed, with time limits and renewal clauses

Signature of Grantor

A deed must be signed by all grantors named in the deed. An attorney in fact can sign for a grantor. This is power of attorney. In Illinois spouse also must sign pertinent documents.

Power of attorney

Specific written authority to execute and sign one or more legal instruments for another person, recorded in county of property

Acknowledgement/Notarization

same terms. Formal declaration made before a notary public, that the person who signs is doing so voluntarily and signature is genuine. In Illinois, acknowledgment is not essential to validity, but it is required in a deed for it to be used as evidence

Delivery and Acceptance

Title is not considered transferred until the deed is actually delivered and accepted by the grantee. Deed may be delivered personally or through third-party. In an arms length transaction, time limits are lifelong.

Settlement agent/escrow agent

3rd Party that delivers deed to grantee as soon as certain requirements have been satisfied

Execution of Corporate Deeds

A corporation can convey real estate only by authority granted in its bylaws, or upon resolution passed by its Board of Directors.

Deeds to corporate real estate can be signed only by an authorized officer

Types of Deeds

Most common deed forms are:

General warranty deed

Special warranty deed

Bargain and sale deed

Quitclaim deed

Deed in trust

Trustee deed

Deed executed pursuant to a court order

General Warranty Deed

Provides the greatest protection of any deed. Grantor is legally bounded by certain covenants:

Covenant of seisin. Grantor owns property and right to convey. Fee simple absolute

Covenant against encumbrances. Grantor state properties, free from liens or encumbrances.

Covenant of quiet enjoyment. Grantor guarantees title will be good against third parties. No strings attached

Covenant of further assurance. Grantor promises to help obtain any instrument needed to make title good if problems arise

Covenant of warranty forever. Grantor promises to compensate grantee for loss, sustained if title fails anytime in future.

Special Warranty deed

Contains two basic warranties, no covenants:

Warranty that grantor received title and owns it

Warranty that property was not encumbered during time the grantor held title

Grantor defend the title against herself, but not against previous encumbrances.

Bargain and sale deed

Contains no express warranties against encumbrances. Implies that grantor holds title and possession of property. Able to sell, but buyer should purchase title insurance.

Quitclaim deed

Least amount of protection. No warranties or covenants and generally conveys only whatever interest the grantor already has.frequently Used to cure a defect on title.

Deed in trust

Means by which a trust store conveys real estate to a trustee for the benefit of a beneficiary.

Cloud on the title

A defect on the title. Needs quitclaim. Example: name misspelling

Trustees deed

Deed executed by a trustee is a trustee deed. Used when a trustee conveys real estate held in the trust to the beneficiary.

Deed executed pursuant to court order

executor and administrators deeds, masters deeds, sheriff deeds, and many other deeds are executed pursuant to a court order. Deed must conform the laws of state property is in.

Transfer tax stamps

State: 0.50 per $500

County: 0.25 per $500

Must be paid before recording of deed. Stamps are fixed to deed.

Many states have enacted laws providing for a state transfer tax on conveyances of real estate. Municipalities have local transfer tax stamps as well.

Transfer tax

The actual tax the stamps are representing. Must be paid before recording of deed.

Tax formula

Full actual consideration (sales price)

Minus value of personal property

Minus amount of mortgage remaining or assumed

Equals net, total taxable, consider consideration to be covered by stamps

Take that number in two separate sections, divide it by 500, multiply by start and county rates.

Equals total transfer tax

Local Transfer Tax

Local municipalities have their own taxes as well. Charts indicating these local transfer tax amounts are available from counties and individual municipalities. Can be paid by seller or buyer.

Real estate transfer declaration

The amount of consideration used for determining transfer taxes must be shown on the Real Estate transfer declaration form. Must be signed by the buyer and seller or their agents. Provide provides for the inclusion of the property description, manner of conveyance and type of financing used.

A completed declaration must accompany every deed presented to the recorder for recording. Made public

Exempted from transfer tax or deeds conveying real estate non-taxable institutions

Involuntary Alienation

Title to Property may be transferred without owners consent. Usually carried out by operation, such as condemnation.

Adverse possession

Also called squatters rights, is another means of involuntary transfer. The law recognizes that the use of land is an important function of its ownership.

Possession by claimant must be:

Open

Notorious

Continuous and uninterrupted

Hostile

Adverse to the true owners possession

Period of 20 years must pass by

Tacking

Successive periods of different adverse possession by different adverse possessors can be combined. Multiple users can equal up to 20 years if proven

Transfer of deceased person’s property

Legally, when a person dies ownership of real estate immediately passes either to the errors by descent or to the person’s named in the will. Before individuals can take full, title and possession, probate, and any claims against the state must be satisfied.

Testate

A person dies and prepares a will about how their property should be handled

Intestate

A person dies without a will and real estate and personal property pass according to state statute of descent and distribution

Transfer of title by will

a Will is an instrument made by an owner to convey title to real or personal . A will is a testamentary instrument, takes effect only after death. Differs from deed.

Testator

Person who makes a will

Devise

The gift of real property by Will

Devisee

A person who receives the gift of real property by Will

Bequest

Aka a legacy. The gift of personal property by Will

Beneficiary

Person who receives the personal property by will/bequest (or legatee)

legal requirements for making a will

Person must be 18

Of sound mind and memory

Two and more witnesses

transfer of title by descent

When a person dies without a will, the person state law of descent, governance, how, and to whom property will be distributed

Probate proceedings

Probate is a formal judicial process that:

Proves or confirms validity of a will

Determines the precise assets of a deceased person

Identifies persons to whom assets are to pass to

The purpose of probate is to see that assets are distributed correctly. A state taxes must be paid before any distribution. Executor presents filing to court.