2.2 Deeds, Title Transfer, Title Insurance, and Recording
Key Takeaways
- A valid deed needs a competent grantor, identifiable grantee, words of conveyance, legal description, grantor's signature, and delivery and acceptance; consideration may be nominal.
- Warranty drops as you move from general warranty (all defects, all time) to special warranty (grantor's own ownership only) to bargain-and-sale to quitclaim (no warranties).
- Recording gives constructive notice; actual notice is direct knowledge; inquiry notice arises from visible facts a reasonable buyer would investigate.
- Recording statutes are race, notice, or race-notice; a bona fide purchaser pays value, acts in good faith, and takes without any form of 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 expires when the loan is paid.
Keep two words apart before anything else: title is the ownership itself; a deed is the written instrument that conveys that ownership from grantor to grantee. You never "sign over the title" — you deliver a deed.
Elements of a Valid Deed
For a deed to convey title it must contain:
- A competent grantor (legal age, sound mind) — the grantee need not be competent, only identifiable.
- Words of conveyance in a granting clause ("I hereby grant and convey").
- A legal description sufficient to identify the parcel.
- Consideration — though it may be nominal ("$10 and other good and valuable consideration").
- The grantor's signature (the grantee does not sign).
- Delivery and acceptance during the grantor's lifetime.
Delivery and acceptance is the most-tested element. Title passes only when the grantor delivers the deed with intent to convey and the grantee accepts. A signed deed locked in a drawer transfers nothing. To be recorded, a deed must also be acknowledged before a notary — but acknowledgment is required for recording, not for validity between the parties.
Deed Types Ranked by Warranty
| Deed type | Warranty level | What the grantor promises |
|---|---|---|
| General warranty | Highest | Defends title against all defects, even before grantor owned it |
| Special warranty | Limited | Defends only against defects arising during grantor's ownership |
| Bargain and sale | Implied | Implies grantor holds title; few or no express warranties |
| Quitclaim | None | Conveys whatever interest grantor has — possibly nothing |
Covenants in a General Warranty Deed
The full warranties ("covenants of title") are split into present and future promises:
- Present — seisin (grantor owns it), right to convey, against encumbrances (none undisclosed).
- Future — quiet enjoyment (no superior claim will disturb), warranty forever (grantor will defend), further assurance (grantor will cure defects).
Trap: A quitclaim deed is fully valid and conveys real title if the grantor actually owns the property — it simply carries no promise. It is common in divorces, family transfers, and curing clouds, not just "worthless" transfers.
Transfer of Title: Voluntary vs. Involuntary
- Voluntary alienation — owner chooses to transfer: by deed (during life) or by will/descent (at death).
- Involuntary alienation — transfer without the owner's consent:
- Foreclosure for an unpaid lien
- Tax sale for unpaid property taxes
- Eminent domain (condemnation) for public use, with just compensation
- Escheat to the state when an owner dies with no heirs and no will
- Adverse possession — a trespasser gains title through use that is O-C-E-A-N: Open, Continuous, Exclusive, Actual, and Notorious (hostile) for the statutory period.
Recording and the Three Notice Types
Recording places a deed in the public land records of the county where the property sits. It does not validate the deed; it protects priority and gives notice.
- Constructive notice — legal notice the public is deemed to have because a document is recorded, whether or not anyone reads it.
- Actual notice — direct, personal knowledge of a fact.
- Inquiry notice — visible facts (a tenant in possession, a path crossing the lot) that would lead a reasonable person to investigate; the buyer is charged with what a reasonable inquiry would reveal.
The Three Recording Statutes
| Statute | Who wins between competing claimants |
|---|---|
| Race | First to record wins, even if they knew of a prior unrecorded deed |
| Notice | A later bona fide purchaser without notice wins, even if they never record |
| Race-notice | A later purchaser wins only if they took without notice and recorded first |
A bona fide purchaser (BFP) pays value, acts in good faith, and takes without actual, constructive, or inquiry notice. Recording acts exist to protect BFPs and to reward prompt recording. You do not memorize a single state's statute for the national portion — you must know that recording defeats later claimants and that a buyer with any form of notice can lose.
Exam Tip: Constructive notice flows from recording; inquiry notice flows from what is visible on the ground. Both can defeat a buyer who claims to be a BFP.
Marketable Title and Title Insurance
Marketable title is title a reasonable buyer would accept — free of serious defects, undisclosed liens, or pending litigation. A cloud on title is any claim or encumbrance that casts doubt; it must be cured or insured over before closing. Common cures: record a release when a lien is paid, file a correction deed for a description error, use an affidavit of heirship, or bring a quiet title action in court.
Title Search and Chain of Title
A title search traces the chain of title — the recorded succession of owners — and flags unreleased mortgages, judgments, easements, and probate gaps. The abstract summarizes that history; an attorney's or insurer's opinion judges marketability.
Owner's vs. Lender's Title Insurance
Title insurance is a one-time premium paid at closing that indemnifies against defects existing on the policy date that surface later.
| Policy | Protects | Coverage amount | Duration |
|---|---|---|---|
| Owner's | Buyer and heirs | Purchase price (often increases) | As long as the insured or heirs hold an interest |
| Lender's | Lender only | Loan balance | Decreases with the loan; ends when loan is paid off |
Title insurance covers forged deeds, undisclosed heirs, recording errors, and undiscovered liens — but not defects arising after the policy date, zoning, or matters a survey would have revealed (unless an endorsement is bought).
Trap: A lender's policy gives the buyer no protection. A buyer who wants protection must purchase a separate owner's policy.
Mini-Case: The Race to Record
Seller deeds a lot to Buyer A, who does not record. Weeks later Seller deeds the same lot to Buyer B, who pays value, knows nothing of Buyer A, and records immediately. In a notice or race-notice state, Buyer B — a bona fide purchaser who recorded — prevails, and Buyer A is left to sue the seller. The lesson the exam wants: record the instant you close.
A grantor signs a deed conveying her home to her nephew, places it in her desk, and tells no one. She dies before mentioning it. Did title pass to the nephew?
In a race-notice jurisdiction, a second buyer can defeat an earlier unrecorded deed only if she: