2.2 Deeds, Title Transfer, Title Insurance, and Recording

What makes a deed valid

A deed is the written instrument that conveys title from a grantor (seller) to a grantee (buyer). Title itself is the evidence of ownership; the deed is the vehicle that moves it. To be valid, a deed generally requires:

1. A competent grantor (of legal age and sound mind)
2. A named, identifiable grantee
3. Consideration (recited, though it need not be the true price)
4. Words of conveyance (the granting clause)
5. A legal description of the property
6. The grantor's signature (the grantee does not sign)
7. Delivery and acceptance during the grantor's lifetime

Delivery and acceptance are what actually transfer title — a signed deed sitting in a drawer conveys nothing until delivered with intent and accepted. Recording is not required for a deed to be valid between the parties; it protects the grantee against later claimants.

Trap: the grantee never has to sign the deed, and a recited consideration of "$10 and other valuable consideration" is sufficient. Answer choices that demand the grantee's signature or the exact sale price are wrong.

Deed types and the warranty spectrum

Deeds differ by the covenants (warranties) the grantor promises. More warranties means more buyer protection.

Key covenants in a general warranty deed include seisin (grantor owns and can convey), quiet enjoyment (grantee will not be disturbed by superior claims), and warranty forever (grantor will defend title).

Trap: a quitclaim deed is a valid deed; it simply gives no warranties. It does not guarantee the grantor owns anything. Candidates wrongly assume a quitclaim is invalid or that it transfers "no" property — it transfers whatever the grantor actually has.

Voluntary and involuntary transfer

Transfer of ownership is called alienation.

Voluntary alienation — the owner chooses to transfer:

• By deed during life (sale or gift)
• By will at death (the giver is the testator; a gift of real property is a devise)

Involuntary alienation — transfer without the owner's consent:

• Descent — owner dies intestate (no will); property passes to heirs by state law
• Escheat — owner dies with no will and no heirs; property passes to the state
• Eminent domain — government takes private property for public use through condemnation, paying just compensation
• Foreclosure — lienholder forces a sale after default
• Adverse possession — a trespasser gains title through open, notorious, continuous, exclusive, hostile possession for the statutory period
• Tax sale — government sells property to satisfy unpaid property taxes

Trap: distinguish escheat (no heirs, goes to the state) from descent (intestate but heirs exist, goes to heirs). Adverse possession requires all five elements — paying taxes alone, or occasional use, is not enough.

Recording, notice, and priority

The recording system is a public, county-level set of records. Recording a deed gives constructive notice — the legal presumption that the world knows of the recorded interest, whether or not anyone actually read it. Actual notice is what a person genuinely knows.

Recording establishes priority among competing claims. The general rule under most recording statutes: first to record (in good faith) generally prevails, even against an earlier unrecorded deed. This is why a buyer records immediately after closing.

Worked priority example

A dishonest owner deeds the same lot to Buyer 1 on March 1 (Buyer 1 does not record). On March 15 the owner deeds it again to Buyer 2, who has no knowledge of Buyer 1 and records the same day. Under a typical recording statute, Buyer 2 prevails because Buyer 2 recorded first in good faith. Buyer 1's remedy is against the fraudulent grantor, not the property.

Now flip it: if Buyer 2 knew about Buyer 1's prior unrecorded deed, Buyer 2 took with actual notice and cannot use the recording act to defeat Buyer 1. Notice — actual or constructive — defeats a later claimant's good-faith status.

Trap: recording does not validate a defective deed and is not required for validity between grantor and grantee. It governs priority against third parties.

Evidence of title and title insurance

Before closing, someone examines the chain of title — the recorded history of ownership. A break or unresolved claim is a cloud on title. An abstract of title is a summary of the records; an attorney or examiner may issue an opinion of title, but an opinion does not insure against hidden risks.

Title insurance protects against losses from pre-existing title defects discovered after closing. Unlike other insurance, the premium is a one-time charge paid at closing, and coverage protects against past events — not future ones.

A standard policy covers defects in the public record (forged deeds, undisclosed heirs, recording errors, prior liens). Items a physical inspection or survey would reveal — encroachments, boundary disputes, rights of parties in possession — are typically excluded unless the buyer purchases extended coverage.

Trap: a lender's policy protects the lender only; the buyer needs a separate owner's policy. And title insurance covers past defects, not problems that arise after the policy date.