Deeds, Title Transfer, and Recording

This section explains how title transfers, what a deed must include, and why recording matters.

Title vs. Deed

• Title is ownership of real property.
• A deed is the legal document that transfers title.

Elements of a Valid Deed

A deed must include:

• Competent grantor and grantee
• Granting clause with words of conveyance
• Legal description of the property
• Consideration (can be nominal)
• Signature of the grantor
• Delivery and acceptance by the grantee

If a deed is delivered but not accepted, no transfer occurs.

Types of Deeds and Warranties

Table: Deed Types and Warranties

Covenants of Title (Warranties)

Covenants are promises made by the grantor. They are often grouped as present or future covenants.

Present covenants include:

• Covenant of seisin - Grantor owns the property.
• Covenant against encumbrances - No undisclosed encumbrances exist.

Future covenants include:

• Covenant of quiet enjoyment - Grantee will not be disturbed by superior claims.
• Covenant of further assurance - Grantor will correct title problems.
• Covenant of warranty forever - Grantor will defend title against lawful claims.

Exam Tip: Quitclaim deeds provide no warranties.

Transfer of Title

• Voluntary alienation - Transfer by deed or will.
• Involuntary alienation - Transfer by foreclosure, tax sale, court order, or adverse possession.

Recording and Notice

Recording a deed in public records protects the buyer and provides constructive notice.

• Constructive notice - Legal notice to the public through recording.
• Actual notice - Direct knowledge of a fact.
• Inquiry notice - Facts that would cause a reasonable person to investigate further.

Recording Acts (General Categories)

States use different recording statutes, but they generally fall into three categories:

• Race - First to record wins.
• Notice - A later bona fide purchaser without notice wins.
• Race-notice - Later buyer must be without notice and record first.

You do not need to memorize your state's statute for the national portion, but you should understand the purpose: recording protects ownership and establishes priority.

Marketable Title and Title Protection

• Marketable title is clear and defensible in court.
• A cloud on title is any issue that makes title questionable.

Title protection tools include:

• Title search and chain of title review
• Title insurance (owner's and lender's policies)
• Quiet title action to resolve disputes

Owner's vs. Lender's Title Insurance

Table: Title Insurance Policies

Title insurance protects against defects in public records, forged deeds, and undisclosed liens, but it does not cover issues that arise after the policy date.

Mini-Case: Unrecorded Deed

Seller conveys a property to Buyer A but Buyer A does not record. Later, Seller conveys the same property to Buyer B, who records and had no knowledge of the first sale. Depending on the state recording statute, Buyer B may win. The key lesson: record immediately.

Exam Tip: Recording provides constructive notice even if no one actually reads the records.

Bona Fide Purchaser (BFP)

Bona fide purchaser - A buyer who purchases in good faith, for value, and without notice of prior claims. Recording statutes are designed to protect BFPs and encourage prompt recording.

If a buyer has actual, constructive, or inquiry notice of a prior claim, the buyer may lose priority.

Deed Execution and Acknowledgment

Most deeds must be signed by the grantor and acknowledged before a notary or authorized officer. Acknowledgment allows the deed to be recorded and helps prevent fraud.

Title Search Basics

A title search traces the chain of title, checks for liens, and confirms legal descriptions. Common defects include:

• Unreleased mortgages
• Missing heirs or probate issues
• Forged or improperly executed deeds
• Boundary disputes and encroachments

If a defect is found, it must be cured before closing or insured over by title insurance.

Escrow and Closing Flow

1. Contract is executed and earnest money is deposited.
2. Title search and survey are ordered.
3. Lender reviews title and issues conditions.
4. Closing documents are signed.
5. Funds are disbursed and deed is recorded.

This process protects both buyer and lender by ensuring clear title at transfer.

Exam Application Check

If a question asks who is protected by a lender's title policy, the answer is the lender. If it asks what protects ownership after closing, the answer is an owner's policy or marketable title.

Common Title Defect Cures

Title issues are often resolved before closing. Common cures include:

• Recording a release after paying off a lien
• Filing a correction deed for errors in a legal description
• Using an affidavit of heirship when ownership is unclear
• Obtaining a quiet title action for serious disputes

Understanding these tools helps you answer exam questions about clearing title and protecting buyers.