2.2 Deeds, Title Transfer, Title Insurance, and Recording

Title to real property passes by voluntary transfer (sale or gift, documented by a deed or by will) or by involuntary transfer (descent when an owner dies intestate, escheat to the state when there are no heirs, eminent domain, adverse possession, or foreclosure). The instrument that conveys title during life is the deed. A deed is the written document that transfers ownership; title is the abstract legal concept of ownership itself. Do not say a person "buys a deed" - the deed is the evidence and vehicle of the conveyance.

Essential Elements of a Valid Deed

For a deed to convey title it generally must contain:

1. Grantor with legal capacity (of legal age and sound mind).
2. Grantee named with enough certainty to be identified.
3. Words of conveyance (the granting clause, e.g., "I hereby grant and convey").
4. Adequate legal description of the property.
5. Consideration recited (even nominal, such as "$10 and other good and valuable consideration").
6. Grantor's signature (the grantee need not sign).
7. Delivery and acceptance during the grantor's lifetime.

Exam trap: Only the grantor must sign and have capacity. A deed is not automatically void merely because the grantee did not sign - delivery and acceptance complete the transfer, not the grantee's signature.

Types of Deeds and Levels of Protection

The general warranty deed offers the most protection and is the standard in most residential sales. A quitclaim deed carries no warranties at all - it simply releases whatever interest, if any, the grantor holds. Quitclaims are used to clear clouds on title, transfer between divorcing spouses, or correct a name error, not for arm's-length sales.

The Covenants of a General Warranty Deed

A full general warranty deed includes these covenants:

• Covenant of seisin - grantor owns and possesses the estate being conveyed.
• Covenant of the right to convey - grantor has the legal power to transfer.
• Covenant against encumbrances - title is free of liens or encumbrances except those disclosed.
• Covenant of quiet enjoyment - grantee will not be disturbed by a superior claim.
• Covenant of further assurance - grantor will sign any later documents needed to perfect title.
• Covenant of warranty forever - grantor will defend the title against all lawful claims.

Notice these are present and future promises: seisin, right to convey, and against encumbrances are tested at delivery, while quiet enjoyment, further assurance, and warranty forever continue indefinitely.

Recording and the Three Types of Notice

Recording means entering the deed (or mortgage, lien, easement) in the public records of the county where the land sits. Recording is not required to make a deed valid between grantor and grantee, but it is essential to protect the new owner against later claims. Recording gives constructive (legal) notice to the world.

The law recognizes three notice types:

• Actual notice - what a person genuinely knows.
• Constructive notice - what a person is presumed to know because it is recorded in the public record.
• Inquiry notice - what a reasonable person would discover from facts that demand investigation, such as a stranger occupying the property.

Exam trap: A purchaser who fails to inspect cannot escape inquiry notice. Visible occupancy by someone other than the seller puts a buyer on duty to ask who they are.

Proving and Insuring Title

Before closing, a title search examines the public record to build the chain of title - the unbroken sequence of conveyances from a recognized starting point to the present owner. The searcher produces an abstract of title (a condensed history) and an attorney or examiner issues an opinion of title or marketable title assessment. A cloud on title is any claim or document that casts doubt on ownership; a suit to quiet title asks a court to remove it.

Because searches can miss hidden defects, buyers and lenders rely on title insurance. Two key policies:

Unlike most insurance, title insurance is a one-time premium paid at closing and protects against past defects (forgery, undisclosed heirs, recording errors), not future events.

Title Insurance Coverage and a Worked Scenario

A standard owner's policy covers defects found in the public record - bad chain of title, forged signatures, undisclosed liens, and clerical recording errors. An extended policy (often ALTA) adds protection for off-record risks such as survey problems, encroachments, and rights of parties in possession that a physical inspection would reveal.

Worked example: A buyer pays $400,000 cash and purchases an owner's title policy. Two years later a previously unknown heir of a prior owner surfaces claiming a one-third interest worth roughly $133,000. The owner's policy defends the lawsuit and, if the claim succeeds, indemnifies the insured up to the policy face amount of $400,000. Had the buyer skipped the owner's policy and bought only a lender's policy, the lender would have been protected but the buyer would have absorbed the loss personally.