2.2 Deeds, Title Transfer, Title Insurance, and Recording
Key Takeaways
- A valid deed needs a competent grantor, identifiable grantee, granting clause, legal description, consideration, the grantor's signature, and delivery accepted by the grantee.
- Warranty strength runs general warranty (covers all defects, even before the grantor owned it) > special warranty (grantor's ownership only) > bargain and sale > quitclaim (no warranties at all).
- Recording creates constructive notice to the world; actual notice is direct knowledge; inquiry notice arises from visible facts a reasonable person would investigate.
- Recording statutes are race (first to record wins), notice (a later BFP without notice wins), or race-notice (a BFP must record first AND lack notice).
- An owner's title policy protects the buyer and heirs as long as they hold an interest; a lender's policy protects only the lender and shrinks with the loan balance, ending at payoff.
Distinguish two words that students constantly swap. Title is the abstract bundle of ownership rights. A deed is the physical written instrument that transfers that title from grantor to grantee. You hold title; you sign a deed.
Elements of a Valid Deed
To convey title, a deed must contain all of the following:
- A competent grantor (of legal age and sound mind) and an identifiable grantee.
- A granting clause (words of conveyance such as "grant and convey").
- A legal description sufficient to locate the land (a street address alone is not enough).
- Consideration — something of value; it may be nominal, e.g., "$10 and other valuable consideration."
- The grantor's signature (the grantee does not sign).
- Delivery and acceptance during the grantor's lifetime.
Trap: A deed signed and notarized but never delivered transfers nothing. Likewise, a delivered deed the grantee refuses to accept fails. Title passes only on delivery and acceptance, not on recording.
Deed Types and Warranty Levels
The deed type controls how much the grantor promises about title. Rank them from strongest to weakest:
| Deed type | Warranty level | What the buyer gets |
|---|---|---|
| General warranty | Strongest | Grantor defends against all defects, even those arising before grantor owned the land |
| Special (limited) warranty | Moderate | Grantor warrants only against defects arising during the grantor's own ownership |
| Bargain and sale | Light | Implies grantor holds title, but makes few or no express warranties |
| Quitclaim | None | Conveys whatever interest the grantor has — possibly nothing — with zero warranties |
A quitclaim deed is the tool of choice for clearing clouds (a divorcing spouse releasing any claim) or correcting records, precisely because the grantor promises nothing.
The Six Covenants of Title
A general warranty deed carries six promises, split by when they can be breached:
- Present covenants (breakable at delivery): seisin (grantor owns it), right to convey (grantor has authority to sell), and against encumbrances (no undisclosed liens or easements).
- Future covenants (breakable later): quiet enjoyment (no superior claim will disturb the grantee), warranty forever (grantor will defend title against lawful claims), and further assurance (grantor will sign documents needed to perfect title).
Transfer of Title: Voluntary and Involuntary
- Voluntary alienation — the owner chooses to transfer: by deed during life, or by will at death (the taker is a devisee for real property).
- Involuntary alienation — title moves without the owner's consent: foreclosure, tax sale, eminent domain (government taking with just compensation), escheat (property reverts to the state when an owner dies with no will and no heirs), and adverse possession.
Adverse possession thresholds tested nationally: the use must be open and notorious, hostile, actual, exclusive, and continuous for the statutory period (commonly 5 to 20 years depending on the state). A simple memory hook is OHACE. If the claim also requires paying taxes and holding color of title, the statutory period is often shorter.
Recording and the Three Notices
Recording a deed in the county land records does not validate the deed — delivery already did that — but it protects the grantee by giving the world legal notice.
- Constructive notice — the legal notice everyone is deemed to have once a document is recorded, whether or not anyone actually reads it.
- Actual notice — real, direct knowledge of a fact.
- Inquiry notice — knowledge the law imputes from visible facts a reasonable person would investigate, such as a tenant clearly in possession or a worn path crossing the land.
A bona fide purchaser (BFP) buys in good faith, for value, and without any of these three notices. Recording statutes exist to reward and protect the diligent BFP.
Recording-Statute Families
| Statute | Who wins between competing buyers |
|---|---|
| Race | Whoever records first wins, even if they knew of the earlier deed |
| Notice | A later BFP who took without notice wins, even if they never record |
| Race-notice | A later buyer wins only if they took without notice AND record first |
Mini-case: Owner deeds Lot 9 to Buyer A, who does not record. Owner then deeds the same lot to Buyer B, a BFP who pays value and records immediately. In a race-notice or notice state, Buyer B prevails over Buyer A. The lesson: record at once.
Marketable Title and Title Insurance
Marketable title is title a reasonable buyer would accept — free of serious defects and defensible in court. A cloud on title is any claim or encumbrance that casts doubt; a quiet title lawsuit can clear it. A title search traces the chain of title and flags problems such as unreleased mortgages, missing heirs, forged deeds, or boundary encroachments. Most defects are cured before closing (recording a lien release, filing a correction deed, or obtaining an affidavit of heirship) or insured over by a title policy.
Owner's vs. Lender's Policy
| Feature | Owner's policy | Lender's (mortgagee) policy |
|---|---|---|
| Who it protects | Buyer and heirs | The lender only |
| Coverage amount | Purchase price | Loan balance, declining as it is paid |
| Duration | As long as the insured holds an interest | Until the loan is paid off |
| Typically required | Optional but recommended | Required by the lender |
Title insurance is a one-time premium paid at closing that covers defects existing on or before the policy date — forged deeds, undisclosed liens, recording errors. It does not cover problems that arise after closing, nor known defects excluded on the policy schedule.
Closing Flow and Exam Application
A typical transfer runs: (1) contract executed and earnest money deposited; (2) title search and survey ordered; (3) lender reviews title and sets conditions; (4) closing documents signed and acknowledged before a notary; (5) funds disbursed and the deed recorded.
Application check: If a question asks who is protected when a forged deed surfaces years after closing, the answer is the owner's title policy holder — the lender's policy would have ended at payoff. If it asks what gives a stranger legal notice of a recorded mortgage, the answer is constructive notice.
A grantor signs and notarizes a deed, places it in a desk drawer, and dies before handing it to the named grantee. Did title pass?
In a race-notice state, Owner deeds a lot to Buyer A, who does not record. Owner then deeds the same lot to Buyer B, who pays full value, has no knowledge of the prior sale, and records the next day. Who owns the lot?