Deeds, Title Transfer, Title Insurance, and Recording

Transferring Title

Title is the legal evidence of ownership; a deed is the written instrument that conveys title from a grantor (seller) to a grantee (buyer). Title can pass two broad ways:

• Voluntary alienation — by deed (sale or gift) or by will (a devise of real property to a devisee).
• Involuntary alienation — without owner consent: by descent (intestate succession when there is no will), escheat (to the state when no heirs exist), eminent domain (government taking for public use with just compensation), foreclosure, adverse possession, or natural processes like accretion and avulsion.

Requirements for a Valid Deed

To be valid and enforceable, a deed generally needs: a competent grantor, an identifiable grantee, consideration (or recital of it), a granting clause (words of conveyance), an adequate legal description, the grantor's signature, and delivery and acceptance. Note the trap: the grantee does not sign the deed, and recording is not required for the deed to be valid between the parties.

Types of Deeds and Their Covenants

Deeds differ in how much the grantor warrants about title. The exam loves to rank them by protection.

A general warranty deed typically includes the covenant of seisin (grantor owns and can convey), covenant against encumbrances, and the covenant of quiet enjoyment (grantee won't be disturbed by a superior claim). A quitclaim deed makes no warranties — it simply releases whatever interest the grantor may have, which is why it is used to clear a title cloud.

Recording and Constructive Notice

Recording a deed in the county land records does not make the deed valid — it provides constructive notice to the world of the grantee's interest and establishes priority among competing claims. Two notice concepts drive the questions:

• Actual notice — what a person genuinely knows.
• Constructive notice — what a person is presumed to know because it is recorded (or, sometimes, because a party is in visible possession, giving inquiry notice).

Priority Under Recording Acts

Most states follow a race-notice or notice statute. The practical rule for the exam: "first in time is first in right" — but only if you record. A buyer who pays value and records without notice of a prior unrecorded claim (a bona fide purchaser) usually defeats the earlier, unrecorded interest. So a grantee who delays recording risks being cut off by a later good-faith purchaser who records first.

Title Evidence and Title Insurance

Because recording fixes priority but not quality of title, buyers and lenders verify ownership through a title search producing an abstract of title (a chronological history) and an attorney's or examiner's opinion of title. The chain of title is the unbroken sequence of recorded conveyances; a gap or conflicting claim is a cloud on title, often cured by a quitclaim deed or a suit to quiet title.

Title Insurance

Title insurance indemnifies against losses from defects existing before the policy date — forged deeds, undisclosed heirs, recording errors, and unmarketable title. Key features:

• A one-time premium paid at closing covers the policy for as long as the insured holds an interest — there are no recurring payments.
• An owner's policy protects the buyer up to the purchase price; a lender's (mortgagee's) policy protects the loan balance and is usually required by the lender.
• A standard policy covers recorded defects; an extended (ALTA) policy adds protection for matters a survey or physical inspection would reveal, such as encroachments and unrecorded liens.

Worked Closing Cost Numerics

Assume a $300,000 sale. Two figures often appear together on title questions:

• Owner's title premium: if the rate is $4.00 per $1,000 of purchase price, the premium is 300 x $4.00 = $1,200, paid once at closing.
• State transfer/conveyance tax (a stamp on the deed): at $1.50 per $500 of price, the price contains 300,000 / 500 = 600 increments, so the tax is 600 x $1.50 = $900.

Watch the per-unit base: title premiums are commonly quoted per $1,000, while transfer taxes are often quoted per $500. Mixing the two bases is the most common arithmetic trap. Also distinguish marketable title (title a reasonable buyer would accept, free of serious defects) from insurable title (title a company will insure despite a known defect by excepting it) — they are not the same, and a contract usually demands marketable title.

Involuntary Transfer and Adverse Possession

Title can change hands without the owner's signature, and the exam expects you to name the mechanism:

• Adverse possession ripens hostile use into ownership. The classic elements are open, notorious, continuous, exclusive, and hostile possession for the statutory period (mnemonic "ONCEH" or "hostile, open, actual, continuous, exclusive").
• Eminent domain is the government's power to take private property for public use; the actual taking is condemnation, and the owner is owed just compensation.
• Escheat sends property to the state when an owner dies with no will and no heirs.

Accession and Natural Forces

Land area itself can change. Accretion is the gradual addition of soil deposited by water; the new land (alluvion) belongs to the adjacent owner. Erosion is gradual loss. Avulsion is the sudden, violent loss of land (a flash flood cutting a new channel) — boundaries generally do not shift with avulsion. Distinguishing the gradual processes (accretion/erosion, which change boundaries) from the sudden one (avulsion, which does not) is a frequently missed point.