Unit 6: Transfer of Title Flashcards

Overview of Title and Voluntary Alienation

• Title Definition: Title represents the right to and evidence of ownership of land.
• Voluntary Alienation: This occurs when an owner intentionally conveys the ownership of property. This process can take the form of either a gift or a sale and involves using a deed.
  • Grantor: The owner who is transferring the title.
  • Grantee: The individual or entity receiving the title.

Requirements for a Valid Deed

To be considered valid, a deed must fulfill several specific legal requirements:

• Legal Capacity of the Grantor: The grantor must have the legal capacity to sign the deed. Deeds signed by minors or individuals who have been declared legally incompetent are characterized as either void or voidable.
• Identifiable Grantee: The grantee must be specifically named and readily identified within the document.
• Statement of Consideration: The deed must contain a statement of consideration. State laws should be consulted for specific requirements regarding how this is expressed.
• Granting Clause: This is the section containing the formal words of conveyance.
• Habendum Clause: Often referred to as the "to have and to hold" clause, it defines the specific extent of ownership taken by the grantee.
• Legal Description: The deed must provide an accurate legal description of the property being conveyed.
• Exceptions and Reservations: Any exceptions or reservations to the title, such as easements, deed restrictions, or restrictive covenants, must be explicitly stated.
• Acknowledgment: The signature of the grantor must be acknowledged (notarized), typically involving a seal or being performed before a notary public or another officer of the court.
• Delivery and Acceptance: The transfer is not complete until the actual delivery of the deed to the grantee and its subsequent acceptance by them.

Execution of Corporate Deeds

Rules for corporate deeds vary by state but generally include:

• Authority: The conveyance of real estate owned by a corporation requires a proper resolution by its board of directors or authority derived from its corporate bylaws.
• Authorized Signature: The deed must be signed by an authorized officer of the corporation.

Types of Deeds

• General Warranty Deed: Provides the highest level of protection. It may state "convey and warrant" or "warrant generally."
  • Covenant of Seisin: The grantor warrants they have full ownership and the legal right to convey the title.
  • Covenant Against Encumbrances: The grantor warrants the title is free from all liens and encumbrances except those specifically mentioned.
  • Covenant of Further Assurances: The grantor promises to furnish any documents or instruments needed to make the title good.
  • Covenant of Quiet Enjoyment: The grantor assumes responsibility for protecting the title against the claims of third parties.
  • Covenant of Warranty Forever: The grantor is Liable for reimbursing the grantee for any loss sustained in the future if the title fails.
  • Broad Defense: The grantor defends the title against defects created by themselves and all previous titleholders.
• Special Warranty Deed: Contains the clause "Grantor remises, releases, alienates, and conveys."
  • It warrants only that the title was not encumbered while the grantor held it, except as noted.
  • It is frequently used by fiduciaries.
• Bargain and Sale Deed: May use the phrases "grants and releases" or "grants, bargains, and sells."
  • It implies the grantor holds title and possession but contains no warranties against encumbrances unless specifically stated.
• Quitclaim Deed: Provides the least protection to the grantee.
  • Carries no covenants or warranties.
  • Transfers only the interest the grantor currently holds, if any.
  • Often used to "cure" a defect or "cloud on the title" (e.g., an easement).
• Deed of Trust: Used by a trustor to convey property to a trustee for the benefit of a beneficiary.
• Reconveyance Deed: Executed by a trustee to return (reconvey) title of property held in trust back to the trustor.
• Trustee’s Deed: Used to convey property out of a trust to anyone other than the trustor, executed under authority granted to the trustee.
• Court-Ordered Deeds: Statutorily defined deed forms used to convey title by court order or will. These include:
  • Executor’s deeds.
  • Administrator’s deeds.
  • Sheriff’s deeds.
  • These usually state the full consideration paid.

Transfer Tax Stamps

• Collection: Taxes are collected by some states, counties, or cities, with rates varying by jurisdiction.
• Payment: Usually payable when the deed is recorded. The cost may be paid by the seller, the buyer, or split according to local custom.
• Calculation: Some jurisdictions use a transfer declaration form, transfer statement, or affidavit of real property value to calculate the tax.
• Exemptions: Items often exempt from transfer tax include:
  • Gifts of real estate.
  • Deeds not connected to a sale.
  • Conveyances to or between government bodies.
  • Deeds by charitable, religious, or educational institutions.
  • Deeds securing or releasing property as debt security.
  • Partitions.
  • Tax deeds.
  • Deeds resulting from corporate mergers.
  • Deeds from subsidiary to parent corporations for stock cancellation.

Involuntary Alienation

Involuntary alienation refers to the transfer of property without the owner's consent, typically via operation of law:

• Eminent Domain: Transfer through condemnation.
• Escheat: Property reverting to the state when no heirs can be found.
• Foreclosure: Due to delinquent real estate taxes, special assessments, mortgage defaults, or deed of trust laws.
• Adverse Possession: Possession by a trespasser that satisfies the ONCHA acronym requirements:
  • Open: Visible to the public.
  • Notorious: Known by others.
  • Continuous: For a statutory number of years.
  • Hostile: Without the owner's consent.
  • Adverse: Against the true owner's right of possession.
• Tacking: Permits the combining of successive periods of adverse possession by different persons to meet statutory duration requirements.

Conveyance of a Deceased Person’s Property

• Transfer by Will (Devise): The person dies testate. A will is a testamentary instrument effective only after the maker's death.
  • Testator: The maker of the will.
  • Requirements for Validity: The maker must be of legal age, sound mind, and acting voluntarily without undue influence. The signing must be witnessed by two or more persons in most states.
  • Codicil: A modification or amendment to an existing will.
  • Holographic Will: A will written entirely in the maker's own handwriting.
  • Nuncupative Will: A verbal will.
• Transfer by Descent (Intestacy): Ownership passes according to state laws of intestate succession because the person died intestate.
  • Primary heirs generally include the spouse and children.
  • The amount received depends on the closeness of the relationship to the deceased.

Probate Proceedings

Probate is a legal process designed to ensure assets are distributed properly:

• Functions of Probate:
  • Proves or confirms the validity of the will.
  • Determines the precise assets of the deceased.
  • Identifies the persons to whom assets shall pass.
• Location: Takes place in the county where the decedent resided.
• Administrator: Appointed by the court if no will designates an executor.
• Debt Satisfaction: The decedent’s debts must be paid before any property is disbursed to heirs or devisees.
• Brokerage Commissions: Commissions on properties listed through probate are fixed by the court and paid only after the court approves the sale.