17.1 Ownership Types, Deeds & Types of Transfers

The Paralegal CORE Competency Exam (PCCE) tests real estate as a labeling-and-documents skill. Domain 2 asks whether the asset is real or personal, which estate the client holds, how concurrent owners hold title, which deed moved the interest, and whether recording protects a later buyer. This is federal-and-general teaching. State statutes vary on marital property, deed forms, and recording races. Learn the common pattern, then read the stem for a local statute. Do not treat any one state's recording act as national law.

Real property, personal property, and fixtures

Real property is land, things permanently attached to land, and associated rights in the surface, air, and (subject to statute) subsurface. Personal property (chattels) is movable. A house and its in-ground improvements are usually real. Furniture, vehicles, and unattached equipment are usually personal.

A fixture is personal property that became real because it was annexed with the intent that it remain. Courts weigh annexation (how firmly attached), adaptation (how customized to the realty), and the annexor's intent (usually the most important factor). A written agreement between buyer and seller, or landlord and tenant, can control. Trade fixtures are a commercial tenant's business equipment; they ordinarily remain that tenant's personal property if removed before the lease ends without serious damage. Emblements are annual crops of a cultivating tenant and are treated as that tenant's personal property.

On a file, label the asset before you draft a bill of sale versus a deed. Selling a house with a built-in furnace usually transfers the furnace as a fixture unless the contract excepts it. Selling the same furnace from a warehouse is a goods deal.

Estates in land

An estate is a possessory interest measured in time.

Fee simple absolute is the largest estate: potentially infinite, freely alienable, devisable, and descendible, with no condition in the granting language.

Defeasible fees look like fee simple but can end. A fee simple determinable uses durational words (so long as, until, while) and ends automatically; the grantor keeps a possibility of reverter. A fee simple subject to condition subsequent uses conditional words (but if, on condition that, provided that) and does not end automatically; the grantor keeps a right of entry (power of termination) that must be exercised. A fee simple subject to an executory limitation shifts the estate to a third person when the condition occurs.

A life estate lasts for a measuring life (to A for life). If the measuring life is someone other than the holder, it is pur autre vie. When the life ends, the property goes to a remainderman or reverts to the grantor. A life tenant may not commit waste that unreasonably damages the remainder or reversion.

A leasehold is a nonfreehold possessory estate: a term of years, a periodic tenancy, a tenancy at will, or a tenancy at sufferance. Section 17.4 covers landlord-tenant labels. For this section, know that a tenant has possession, not a freehold.

Concurrent ownership

Tenancy in common is the default concurrent estate in most states. Co-tenants have undivided possession. Shares may be unequal. There is no right of survivorship. Each share is devisable and descendible.

Joint tenancy with right of survivorship requires the four unities of time, title, interest, and possession, plus clear survivorship language in many modern statutes. On death, the decedent's share vanishes and the survivors take. A joint tenant who conveys that tenant's share severs the joint tenancy as to that share; the buyer holds as a tenant in common with whoever remains.

Tenancy by the entirety exists only in some states and only for spouses (and, in a few jurisdictions, equivalent partners). It has survivorship and typically cannot be severed by one spouse alone. One spouse's individual creditor often cannot reach entireties property — state variation.

Community property is a marital-property system used in a minority of states (including California, Texas, Arizona, and several others; Alaska has an opt-in statute). Earnings and property acquired during the marriage are generally owned equally, with exceptions for gift and inheritance. Do not assume community property on a stem set in a common-law state, and do not assume tenancy by the entirety on a stem set in a community-property state.

Deeds: parties, parts, and delivery

A deed is the instrument that conveys real property during life. The grantor conveys; the grantee receives. Essential parts typically include a competent grantor, an identifiable grantee, words of conveyance, a legal description, the grantor's signature, and delivery plus acceptance. The habendum clause (to have and to hold) describes the estate granted. Exceptions and reservations carve out easements or minerals. Consideration is often recited, but a gift deed can be valid between the parties.

Legal descriptions identify the land: metes and bounds (courses and distances from a monument), lot and block (a recorded plat), or the rectangular / government survey (township, range, section). A street address is not a substitute for a legal description on a deed.

Delivery is the grantor's present intent to transfer. Physical handing-over helps but is not required if intent is clear; escrow delivery can work. Acceptance is presumed if the deed benefits the grantee. A signed deed left in a drawer with no present intent does not pass title. Acknowledgment (notarization) is generally required to record, not to make the deed valid between the parties.

Deed types

A general warranty deed gives the full common-law covenants of title and covers the entire chain: typically seisin, right to convey, and against encumbrances (present covenants), plus quiet enjoyment, warranty, and often further assurances (future covenants).

A special warranty deed (limited warranty) warrants only against defects arising from the grantor's own period of ownership, not from earlier owners.

A quitclaim deed transfers whatever interest the grantor actually has and gives no warranties. It is used to clear clouds, complete a divorce transfer, or release a possible claim. It is not a promise that the grantor owns anything.

Some states also use a bargain and sale deed that recites consideration and may imply seisin without full warranties. Read the stem's quoted language.

Recording and bona fide purchaser priority

A deed is valid between the parties without recording. Recording gives constructive notice and determines priority against later claimants.

Three statutory patterns appear on exams:

• Race: the first grantee to record wins, even if that person knew of a prior unrecorded deed.
• Notice: a subsequent bona fide purchaser (value plus no actual, constructive, or inquiry notice) wins against a prior unrecorded deed.
• Race-notice: a subsequent bona fide purchaser who also records first wins.

A bona fide purchaser pays value without notice. Donees, heirs, and devisees are not bona fide purchasers as to their own taking, though they may step into a predecessor's recorded protection.

How title moves

Title moves by sale (contract plus deed), gift (deed plus donative intent), devise (will) or descent (intestacy — Chapter 15), foreclosure or tax sale, and, conceptually, adverse possession. Adverse possession requires actual, open and notorious, exclusive, hostile, and continuous possession for the state statutory period. Periods, color of title, tax payment, and tacking vary. Eminent domain and dedication also transfer title; flag them if the stem mentions a taking or a plat.

Path. Seller owns in fee simple and deeds Blackacre to Buyer by general warranty deed; Buyer records the next day in a race-notice state. Buyer has legal title and constructive-notice protection. If Seller had earlier given an unrecorded gift deed to a cousin, the cousin is not a bona fide purchaser, and Buyer who paid value without notice and recorded first prevails.

Term-swap. Fixture is annexed personal property. Fee simple is the largest estate. Determinable ends automatically; condition subsequent needs a right of entry. Tenancy in common has no survivorship. Joint tenancy has a right of survivorship and four unities. Quitclaim has no warranties. Delivery plus acceptance, not recording, passes title between the parties.