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					Chapter 8 Deeds Chapter Outline

I.

Legal Requirements of a Deed A. Definitions 1. Deed: a formal written instrument that conveys title to real property from one party to another. 2. Grantor: the person or entity conveying title of real property to another. 3. Grantee: the person or entity to whom title to real property is conveyed. B. Requirements for a valid deed are 1. a written instrument, 2. signed by a competent grantor, 3. identifying the grantee(s), 4. indicating the date of conveyance, 5. containing a recital of consideration, 6. words of conveyance of 7. real property described with specificity, which is 8. witnessed (f required by state statute) and 9. acknowledged (if required by state statute), and 10. delivered by the grantor to the grantee. C. Grantor 1. Grantors may be individuals, business entities, trustees, guardians, personal representatives, or governmental authorities or agents. 2. They must be competent. a. For individuals: They must be of legal age and sound mind b. For business entities: They must be in legal existence, operating in full accordance with laws of the state of domicile, and have proper authorization to convey the property. 3. Marital status should be indicated. 4. If married, the spouse should be named as a grantor also, even if the property is only in one name. 5. The grantor’s name must appear precisely the way it was written in the deed by which he/she acquired the property. 6. The grantor’s name on the signature line of the deed should conform to the grantor’s name as it appears in the opening paragraph.

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D. Grantee 1. 2. 3. 4.

Grantees do not sign the deed. Grantees are not subject to competency requirements. Marital status should be indicated. Method of taking title should be indicated (e.g., tenants in common, tenants by the entireties).

E. Date 1. Date of execution of the deed should appear in the opening paragraph or near the signature. 2. Transfer of ownership is completed when the deed is delivered by the grantor to the grantee. 3. Unless there is evidence to the contrary, the delivery date is presumed to be the date appearing on the face of the deed. F. Consideration 1. The deed must contain a recital of consideration. 2. In most cases, recitation of nominal consideration is sufficient. 3. Certain deeds require recitation of actual consideration. G. Words of conveyance 1. Words of conveyance include indication of the type of estate conveyed. 2. Exact words vary from state to state. 3. In many states, a fee simple estate will be presumed if no words of limitation indicate otherwise. H. Legal description 1. An accurate legal description of the real property to be transferred must be included. 2. If conveyed, personal property should not be included. It should be listed on a bill of sale. 3. The legal description should be metes and bounds, government survey, or plat description. 4. The legal description should be a copy of the prior deed or title policy (unless the entirety of the property listed on the prior deed or policy is not being conveyed.) I. Witnesses and acknowledgment: Rules vary from state to state. J. Delivery 1. Legal transfer of ownership of real property is not complete until the deed is physically delivered by the grantor (or grantor’s agents) to the grantee and the deed is accepted by the grantee.

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2. As long as the deed remains in the possession of the grantor, there is a rebuttable presumption that the transfer of ownership has not taken place. 3. If the deed is physically delivered to the grantee, the grantee’s acceptance is presumed. Further, if the deed is recorded in the public records, it is presumed to have been delivered and accepted. K. Other requirements 1. Some states require other information such as social security numbers, property appraiser’s identification number, and/or preparer’s name. 2. Documentary stamps a. Definition: tax imposed on the transfer of real property. b. Most states impose this tax. c. The tax is based on the purchase price of the property. II. Deed Clauses A. Premises clause: the opening paragraph of a deed, setting forth the date of execution of the deed, the parties to the deed, and, in states that so require, the addresses of the parties. B. Granting clause: a clause that contains the words of conveyance expressing the grantor’s intention of transferring the real property. It also includes the recital of consideration and description of the property to be conveyed. C. Encumbrance clause: a clause setting forth any encumbrances on the real property conveyed, such as mortgages, leases, liens, easements, or restrictions. D. Reddendum clause: a clause reserving some right in the real property for the grantor or imposing a restriction on use of the property by the grantee. E. Habendum clause: a clause describing the type of estate being conveyed to the grantee(s). F. Tenendum clause: a clause indicating the improvements that are being conveyed together with the land, such as the buildings built on the land. G. Seisin clause: a clause whereby the grantor warrants that he/she is the rightful owner of the property in question and thereby has the right and power to convey the property to the grantee. It is found in general warranty deeds and special warranty deeds.

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H. Testimonium clause: a clause in which the deed is executed, witnessed, and acknowledged. III. Common Types of Deeds A. General warranty deed 1. Definition: a deed by which the grantor states that he/she has valid title and will defend that title against any defect arising from the actions of the grantor or those of the grantor’s predecessors. 2. This deed provides the most protection for the grantee. 3. The deed contains the following covenants (promises or guarantees): a. covenant of seisin, b. covenant against encumbrances, c. covenant of quiet enjoyment, d. covenant of further assurances, and e. covenant of warranty forever. 4. Typical words of conveyance are: “grants, bargains and sells.” 5. If the contract is silent as to what type of deed is to be used, it typically is a general warranty deed. B. Special warranty deed 1. This deed also is known as limited warranty deed. 2. Definition: a deed by which the grantor, in conveying title to real property, warrants only that he/she has done nothing to encumber the property but does not provide further assurances with regard to the grantor’s predecessors. 3. The wording that indicates this limited warranty is “by and through the grantor” or “by, through or under the grantor.” 4. This type of deed is commonly used when real property is sold at public auction or when property is conveyed by a personal representative of an estate, but it can be used in other circumstances. C. Bargain and sale deed 1. This deed also is known as a deed of bargain. 2. Definition: a deed that transfers the real property itself rather than transferring any particular interest in the property. 3. It generally contains no warranties. D. Quitclaim deed 1. This deed also is known as a release deed. 2. Definition: a deed in which the grantor transfers whatever interest he/she may have without making any warranties regarding the quality of title.

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3. The words “remise, release, and quitclaim” often are used rather than “grant, bargain and sell.” 4. This deed is used most often in intrafamily transfers of title, in divorce proceedings, in probate proceedings when an heir wishes to give up a claim, and to clear any present or potential cloud on the title of a property, or the transfer of less than a fee simple title. IV. Special Purpose Deeds A. Corrective deed 1. This type of deed is used to rectify errors and to re-form the deed to reflect the original intentions of the parties. 2. A documentary stamp tax need not be paid, because this deed does not represent another conveyance of the property. 3. A corrective deed relates back to the date of the original deed. B. Deeds conveying government-owned property 1. Conveyance must be approved by the appropriate legislative body. 2. The legislative body then must confer authority on official to act on behalf of the city, county, or state in the transaction. 3. If the land is state-owned, the governor, a state agency, or committee must approve the actions of the state legislature in making the decision to sell the property. 4. The deed must recite the date and number of the bill approving the conveyance, must be signed by the official authorized to act on behalf of the state and by the governor, and must be attested to by the secretary of state (if state-owned property). C. Fiduciary deeds 1. A fiduciary ordinarily will not convey property through the use of a general warranty deed but instead through the use of a special warranty deed. 2. Personal representative deed a. The personal representative operates under the auspices of the probate court. b. If the property is being conveyed to an heir or a beneficiary, a recital of nominal consideration is appropriate. c. If the property is being sold and the proceeds are disbursed to heirs or beneficiaries, the actual consideration paid must be recited in the deed. 3. Guardian’s deed a. Full disclosure must be made in the deed regarding the actual consideration paid.

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b. In most states the guardian must petition the court for permission to sell the real property and the court oversees the transaction. c. The court may require the guardian to post bond and may appoint a referee. 4. Sheriff’s or referee’s deed a. This deed is used in foreclosure sales. b. The court entering judgment on behalf of the creditor(s) will direct a sheriff or court-appointed referee to oversee the public auction of the real property, after which the property is conveyed to the highest bidder. c. The owner of the property does not sign the deed; the sheriff or referee does. d. Although the sheriff or referee is not considered to be a fiduciary, this deed is similar to a fiduciary deed in that the grantor makes no guarantee(s) concerning title except the guarantee that he/she has not encumbered the title. Also, it is similar because it must fully disclose the consideration paid for the property. e. It also can be used to partition property. V. Preparation of Deeds A. Review state statutes to determine statutory deed forms. 1. If there are no statutory deed forms, determine state requirements regarding the number of witnesses, form of acknowledgment, inclusion of parties’ addresses, etc. 2. Determine documentary stamp tax. B. Review grantor’s current deed for 1. correct spelling of grantor’s name and grantor’s marital status, 2. legal description of the property, 3. listing of any encumbrances, and 4. property appraiser’s tax identification number (if required). C. Review updated title examination for a listing of any encumbrances (check against grantor’s current deed). D. Review contract for sale and purchase for 1. type of deed required by contract, 2. correct spelling of grantee’s name and marital status (doublecheck against other documents or directly with the grantee), 3. closing date, and 4. social security numbers (if required). E. Determine the manner in which the title is to be held by grantee(s).

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F. Determine whether additional encumbrances (other than those of record) exist or will be created (for example, a second mortgage). These must be included in the deed. G. Using the information supplied above, draft the following: 1. Premises clause a. Leave date of execution blank. b. Insert appropriate county and state, name and status of the parties, manner in which the title will be held (this may be included additionally or alternatively in the granting clause), and addresses of the parties, if applicable. 2. Granting clause a. Insert the recital of consideration and the manner in which the title is to be held by the grantees, if this was not included in the premises clause. b. Insert the legal description (either type the legal description in the body of the deed or include it as an exhibit). 3. Encumbrance and reddendum clauses: Insert all “subject to” provisions and any reserving clause. 4. Testimonium clause a. Prepare signature lines for grantor(s) and witnesses. b. Prepare acknowledgment. H. Before the deed is signed 1. Have the supervising attorney review it. 2. Once the date of closing is confirmed, insert the date, and then make copies for grantor, lending institution, and office file. I. After the deed is signed 1. Conform copies to the original. 2. Prepare (or acquire) a check for the documentary stamp tax and recording fees. 3. Record the deed and comply with local and state taxing departments. 4. Return original deed to the grantee.

VI.

Recording Deeds and Other Real Estate Documents A. Recording: delivering a document to the appropriate government official for transcription into a plat book, deed book, mortgage book, or official records book.

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B. Purpose of recording documents: to put the public on notice regarding the information contained in the document. 1. Constructive notice: notice legally presumed because of the recording of documents in the public records. 2. Actual notice: direct knowledge a person has about the ownership and condition of the real property. C. Recording statute 1. Definition: a statute that prescribes the requirements for recording a document and that determines the priority of rights to real property if there are conflicting claims. 2. Bona fide purchaser for value: someone who purchases property in good faith and for valid consideration. 3. Three types of recording statutes: a. Race statute: a recording statute whereby priority of claim of title of real property is determined literally by a race to the recording office!. b. Notice statute: a recording statute whereby the notice a subsequent purchaser has of a previous purchaser’s deed is imperative in determining the priority of title to the real property. c. Race-notice statute: a recording statute premised on protecting a bona fide purchaser for value without notice if he//she is the first to record the deed to real property. This is the most common form of recording statute. D. Torrens system 1. Definition: a method for determining title to real property through the institution of a lawsuit. 2. Procedure commences when an applicant files an application with the court in which he/she makes a claim to title of the property and lists any other parties who have any interest in the property. 3. Suit is brought in which all those listed are defendants and must defend their claims to title. If they fail to appear in court to defend their claims or if their claims are found to be inferior, the applicant is considered the proper titleholder. 4. Torrens certificate: in states that utilize the Torrens systems, a certificate, issued by the registrar of title, that is the actual legal title to the real property.

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