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, consideration, the grantor's signature, and delivery and acceptance - the grantee never signs.
- Warranty levels descend from general warranty (covers all defects, even before the grantor owned it) to special warranty to bargain-and-sale to quitclaim (no warranties at all).
- Title transfers voluntarily by deed or will and involuntarily by descent, foreclosure, tax sale, eminent domain, escheat, or adverse possession.
- Recording gives constructive (legal) notice to the world; the three statute types are race, notice, and race-notice, all built to protect a bona fide purchaser.
- An owner's title policy protects the buyer as long as they or their heirs hold an interest; a lender's policy protects only the lender and shrinks as the loan is paid.
Title Versus Deed
Title is the legal evidence of ownership - the abstract right itself. A deed is the written instrument that transfers that title from a grantor (seller/giver) to a grantee (buyer/receiver). You do not record title; you record the deed that proves it.
Elements of a Valid Deed
For a deed to convey title it must contain:
- A competent grantor (of legal age and sound mind) and an identifiable grantee
- Words of conveyance in the granting clause ("I hereby grant and convey")
- A legal description sufficient to locate the land
- Consideration (even nominal, like "$10 and other valuable consideration")
- The grantor's signature (the grantee never signs the deed)
- Delivery and acceptance during the grantor's lifetime
Exam trap: Title passes only on delivery AND acceptance, not when the deed is signed or recorded. A signed deed locked in a drawer transfers nothing.
Most deeds are also acknowledged before a notary. Acknowledgment is not required for validity between the parties, but it is required before the deed can be recorded.
Deed Types and Warranty Levels
Deeds differ by how much the grantor promises about the title. Learn this ladder from most to least protection:
| Deed Type | Protection | What It Promises |
|---|---|---|
| General warranty deed | Highest | Defends against ALL defects, even ones before the grantor owned it |
| Special (limited) warranty deed | Medium | Defends only against defects arising during the grantor's ownership |
| Bargain and sale deed | Low | Implies the grantor owns it but gives few or no express warranties |
| Quitclaim deed | None | Conveys only whatever interest the grantor has - maybe nothing |
Covenants of Title (the Six Warranties)
A general warranty deed carries six covenants, grouped by when they can be breached:
Present covenants (breached, if at all, at the moment of delivery):
- Seisin - the grantor owns the estate being conveyed
- Right to convey - the grantor has legal power to transfer it
- Against encumbrances - no undisclosed liens, easements, or restrictions
Future covenants (breached later, if a claim surfaces):
- Quiet enjoyment - the grantee won't be evicted by a superior claim
- Warranty forever - the grantor will defend the title against lawful claims
- Further assurance - the grantor will sign documents needed to perfect title
Exam tip: A quitclaim deed gives zero warranties; it is used to clear clouds, fix boundary doubts, or transfer between divorcing spouses - not to assure good title.
How Title Transfers
Voluntary alienation is a transfer the owner chooses:
- By deed during life
- By will at death (the giver is the testator; a gift of real property is a devise)
Involuntary alienation happens without the owner's choice:
- Descent - dying intestate (no will); property passes by state statute to heirs
- Escheat - no heirs and no will, so the state takes the property
- Foreclosure - lender forces a sale for unpaid debt
- Tax sale - government sells for unpaid taxes
- Eminent domain - government takes for public use (with just compensation, via condemnation)
- Adverse possession - a trespasser gains title by open, hostile, continuous use
Adverse Possession Elements
Claimants must show possession that is O-C-E-A-N: Open and notorious, Continuous (for the statutory period), Exclusive, Adverse (hostile, without permission), and Notorious/visible. Many states also require the claimant to pay property taxes during the period. Permission from the owner defeats the claim - a tenant or licensee can never adversely possess.
A seller wants to transfer a parcel but will only promise that no title defects arose during the years she personally owned it - nothing about the time before she bought it. Which deed fits this exactly?
Recording and the Three Types of Notice
Recording means entering the deed in the county's public land records. It does not make the deed valid, but it provides constructive notice - the law presumes the whole world knows the contents whether or not anyone actually reads them.
Three notice concepts are tested:
- Actual notice - real, direct knowledge of a fact (you were told, or you saw the document).
- Constructive notice - notice imputed by law because a document is recorded.
- Inquiry notice - facts a reasonable person would investigate, such as a tenant living on the land or a worn path crossing it.
A bona fide purchaser (BFP) buys in good faith, pays value, and takes without notice of prior claims. Recording statutes exist to protect BFPs and to reward prompt recording.
Recording-Act Categories
| Statute | Who Wins Between Two Buyers |
|---|---|
| Race | Whoever records first, even with knowledge |
| Notice | A later BFP who took without notice |
| Race-notice | A later BFP who took without notice AND records first |
Exam tip: In a race-notice state you must do BOTH - be a BFP and win the race to record.
Worked Scenario - The Double Sale
Seller deeds Lot 7 to Buyer A on Monday, but A does not record. On Friday Seller deeds the same Lot 7 to Buyer B, who has no knowledge of A and immediately records. In a race-notice or notice state, B wins - B was a bona fide purchaser without notice. A's only remedy is to sue the seller for fraud. The lesson tested again and again: record immediately.
Marketable Title and Title Insurance
Marketable title is title free of serious defects, reasonably free of litigation risk, and acceptable to a prudent buyer. A cloud on title is any claim or document that casts doubt on it; a quiet title lawsuit asks a court to remove the cloud.
Before closing, a title search traces the chain of title and uncovers liens, gaps, or errors. Title insurance then protects against hidden defects.
| Policy | Protects | How Long It Lasts |
|---|---|---|
| Owner's policy | The buyer/owner | As long as the owner or heirs hold an interest |
| Lender's (mortgagee) policy | The lender only | Until the loan is paid off; coverage declines with the balance |
Title insurance is paid once at closing and covers defects existing on or before the policy date - forged deeds, undisclosed heirs, recording errors. It does not cover problems created after the policy date.
Curing Title Defects
When a search reveals a problem, it must be fixed (cured) or insured around before closing. Common cures:
- Release/satisfaction recorded after a paid-off mortgage or lien
- Correction (reformation) deed to fix an error in a legal description or name
- Affidavit of heirship when ownership passed by death without clear records
- Quiet title action for serious or disputed clouds a court must resolve
Closing Flow at a Glance
- Contract signed; earnest money deposited into escrow.
- Title search and survey ordered.
- Defects cured; lender clears conditions.
- Documents signed at closing; funds disbursed.
- Deed recorded to give constructive notice and protect the buyer.
Exam application: If a question asks who is protected once a buyer's mortgage is paid in full, remember the lender's policy has ended - only the owner's policy continues to protect the homeowner.
In a race-notice state, Seller deeds a lot to Tomas, who fails to record. Days later Seller deeds the same lot to Priya, who knows nothing of Tomas and records that afternoon. Who holds superior title and why?