2.2 Deeds, Title Transfer, Title Insurance, and Recording

Deeds and the Requirements for a Valid Deed

A deed is the written instrument that transfers (conveys) an interest in real property from the grantor (seller/transferor) to the grantee (buyer/transferee). Transfer of title by deed is called alienation; a voluntary transfer is voluntary alienation, while transfers by court order, foreclosure, eminent domain, or adverse possession are involuntary alienation.

For a deed to be valid and enforceable, exams require these essentials:

• Grantor with legal capacity (of age, competent) and a grantee named/identifiable
• Words of conveyance (granting clause showing intent to transfer)
• Adequate legal description of the property
• Consideration (recited, even if nominal such as "$10 and other good consideration")
• Grantor's signature (the grantee does not sign the deed)
• Delivery and acceptance — title does not pass until the deed is delivered and accepted during the grantor's lifetime

Types of Deeds and Their Covenants

Deeds differ by how much warranty (protection) the grantor gives. Memorize them from strongest to weakest:

The general warranty deed carries five covenants, most tested being the covenant of seisin (grantor owns and can convey), covenant against encumbrances, and covenant of quiet enjoyment. A quitclaim deed offers the least protection and is the classic answer for removing a "cloud on title."

Title, Chain of Title, and Title Insurance

Title is the evidence of and right to ownership, not a physical document. To prove ownership, a title search traces the chain of title — the recorded succession of owners over time. A break or gap in this chain, or any recorded claim casting doubt on ownership, is a cloud on title that must be cleared (often by quitclaim deed or a suit to quiet title).

Marketable title is title reasonably free of defects, liens, and litigation — the standard a buyer can demand. An abstract of title is a condensed history of recorded documents; an attorney or examiner reviews it to render a title opinion.

Title insurance protects against losses from defects that existed before the policy date but were undiscovered (forgery, undisclosed heirs, errors in records). Key facts: it is a one-time premium paid at closing, covers past defects (not future events), and pays for legal defense of covered claims.

Owner's vs. Lender's Policy

Worked example: A home sells for $400,000 with a $320,000 loan. The owner buys an owner's policy at $400,000 and the lender requires a mortgagee policy at $320,000. If an undisclosed pre-existing lien of $50,000 surfaces two years later when the loan balance is $300,000, the owner's policy responds up to its limit to protect the owner's interest, while the lender's policy is capped at the current $300,000 balance. Trap: A lender's policy does not protect the buyer's equity — buyers need their own owner's policy.

Recording and Priority of Interests

Recording is entering documents into the public records of the county where the property sits. Recording does not transfer title (delivery and acceptance do that), but it gives constructive notice — the law treats the whole world as knowing what is recorded. Actual notice is real knowledge; constructive notice is presumed from the public record (or, in some cases, from someone in visible possession).

Recording determines priority among competing claims. Most jurisdictions follow a "first in time, first in right" rule modified by recording statutes:

• Race statute: First to record wins, regardless of notice.
• Notice statute: A later buyer without notice (bona fide purchaser) wins, even if they record after.
• Race-notice statute: A later good-faith buyer wins only if they both lack notice and record first.

Trap: A deed can be valid between the parties yet lose to a later bona fide purchaser who records first. This is why buyers record immediately and why title insurance and searches exist.

Putting the Transfer Together

The national portion frequently chains these concepts into one fact pattern, so practice the full sequence of a clean transfer:

1. The parties sign a purchase contract (covered in the contracts chapter); the buyer orders a title search to confirm marketable title.
2. Any discovered clouds — old liens, a missing heir's interest, a break in the chain — are cleared by payoff, release, quitclaim deed, or a suit to quiet title before closing.
3. At closing the grantor signs and delivers a deed (usually a general warranty deed in a residential sale) and the grantee accepts it — this is the moment title legally passes.
4. The grantee buys an owner's title policy; the lender requires its own mortgagee policy.
5. The deed is recorded in the county land records, giving constructive notice and locking in the buyer's priority against later claimants.

A frequent exam twist separates the legal transfer from the recording. Title passes on delivery and acceptance, even before recording. Recording is what protects that title against third parties — so an unrecorded but delivered deed is valid between grantor and grantee yet vulnerable to a later good-faith purchaser. Knowing which step solves which problem is the difference between a deed answer, a title-insurance answer, and a recording-priority answer.