Florida Real Estate Principles, Practices & Law 38th Edition Linda L. Crawford Copyright © 2015 Kaplan, Inc. All rights reserved.

Chapter 9 Title, Deeds, and Ownership Restrictions

©2015 Kaplan, Inc. Title to Real Property A person holds vested ownership rights in property –Title A legal concept signifying ownership to the collection of rights called an estate –Equitable title The beneficial interest that implies a person will receive legal title at a future date; the interest that a buyer receives upon executing a contract prior to title closing

Acquiring Legal Title Alienation Act of transferring ownership, title, or an interest in real property Alienation may be –Voluntary With the owner’s control and consent –Involuntary Without owner’s control and consent ©2015 Kaplan, Inc.

Voluntary Alienation Deed –A written instrument used to convey an interest in real property –Conveys legal title Will –Testate Deceased person prepared will before death –Testator (testatrix) person who leaves a will ©2015 Kaplan, Inc.

Involuntary Alienation Descent When person dies without leaving a will (intestate) property descends to heirs Escheat provides for government to take property of owner who dies intestate and has no known heirs Adverse possession when the true owner sleeps on owner’s rights Eminent domain gives government right to take property for public purpose through a condemnation proceeding ©2015 Kaplan, Inc.

Conditions for Adverse Possession Hostile possession Open possession Taxes paid by adverse possessor Claim of title Adverse possession for 7 years Notorious and flagrant public possession ©2015 Kaplan, Inc.

Types of Notice Actual Direct knowledge acquired in the course of a transaction Constructive (legal notice) Recording in the public records Acknowledgment Formal declaration before a notary public by grantor that the signing is a free act ©2015 Kaplan, Inc.

Condition of Title Chain of title is complete successive history Title search Abstract of title is a summary report of title search found in public record Opinion of title Executed by an attorney who has studied the abstract ©2015 Kaplan, Inc.

Title Insurance Contract that protects policyholder from losses from defects in title Florida does not require title insurance Licensees are not qualified to give opinion of title Licensees first must obtain a current opinion from an attorney before quoting an opinion that title is good ©2015 Kaplan, Inc.

Title Insurance Owner’s Policy Issued for purchase price Protects new owner and owner’s heirs Not transferable to another owner One-time premium Lender’s Policy Issued for unpaid mortgage amount Protects lender against title defects Transferable (assignable) Protects lender up to outstanding loan balance Most lenders require as a condition of making loan One-time premium ©2015 Kaplan, Inc.

Deeds A written instrument that conveys title Two parties to a deed –Grantor – owner giving title –Grantee – new owner receiving title Must be signed by a competent grantor and two witnesses –Grantee does not sign deed ©2015 Kaplan, Inc.

Elements of a Deed Consideration—good or valuable Execution—signatures of competent grantor and two witnesses Description of property Delivery and acceptance—voluntary Interest or estate being conveyed Names of grantee and grantor Granting clause and others ©2015 Kaplan, Inc.

Clauses in a Deed Premises names parties –Date of deed –Granting clause – words to convey title Habendum –“To have and to hold” –Type of estate conveyed “Forever” = fee simple “Life of the grantee” = life estate ©2015 Kaplan, Inc.

Clauses in a Deed Seisin –Grantor owns –Grantor has right to convey title Covenant against encumbrances –Property is free from liens or other encumbrances unless noted on the deed ©2015 Kaplan, Inc.

Statutory Deeds Quitclaim deed –Grantor quitclaims to the grantee all of grantor’s rights, title, and interest –Used to clear clouds on title –Remise, release, and quitclaim –Grantor does not claim ownership No Covenant of Seisin –No warranty to defend title –Suit to quiet title ©2015 Kaplan, Inc.

Statutory Deeds Bargain and sale deed –Granting, habendum and seisin –No future warranty –Conveys all the title the grantor has, but it does not protect grantee from clouds or claims on the title ©2015 Kaplan, Inc.

Statutory Deeds Special warranty deed Grantor does not warrant title except against acts by the grantor or grantor’s representative Used by large corporations when selling property and by lenders selling foreclosed property ©2015 Kaplan, Inc.

Statutory Deeds General warranty deed –Full covenant and warranty deed –Contains all covenants and warranties available Quiet enjoyment—peaceful possession undisturbed by claims of title Further assurance—grantor will deliver legal instrument if required Warranty forever—to defend grantee’s title ©2015 Kaplan, Inc.

Special Purpose Deeds Personal representative’s deed –Personal representative is appointed by will or by court to settle estate of deceased person Guardian’s deed –Guardian acts on behalf of a minor Committee’s deed –Used when owner is legally incompetent Certificate of title given at a foreclosure sale ©2015 Kaplan, Inc.

Legal Requirements General warranty deed required unless otherwise stated in contract Transfer of title is not effective until the deed is delivered and accepted ©2015 Kaplan, Inc.

Ownership Limitations and Restrictions Government Police power –Zoning Ordinances –Building Codes –Health Ordinances Eminent domain –Fair Price –Condemnation proceeding Taxation (property) Private Deed restrictions Easements Leases Liens ©2015 Kaplan, Inc.

Deed Restrictions Deed restrictions are part of a deed –Affect only one particular property Restrictive covenants often recorded with the plat map –Affect all the properties in a subdivision ©2015 Kaplan, Inc.

Easements Right to use portion of owner’s land for a specific purpose Does not convey ownership (possession) Terminated by agreement, abandonment, court order ©2015 Kaplan, Inc.

Types of Easements Created by written agreement –Easement Appurtenant Benefits adjacent parcel of land –Easement In Gross Benefits individual or business entity Created through a court of law –Easement By Necessity Landlocked –Easement By Prescription 20 years open, continuous, noninterrupted use ©2015 Kaplan, Inc.

Encroachment Unauthorized use of another’s property –Fence or garage located beyond boundary –Implied easement after seven years ©2015 Kaplan, Inc.

Leases Grants right of possession and use to lessee (tenant) –Does not transfer ownership interest Must be written and signed to be enforceable if over one year –Also requires signatures of 2 witnesses if over 1 year Licensees may use fill-in-the-blank lease forms approved by FL Supreme Court ©2015 Kaplan, Inc.

Types of Leases Gross –Tenant pays fixed rent Net –Tenant pays fixed rent plus building expenses Ground –Lease on land ©2015 Kaplan, Inc.

Percentage Lease Percentage –Minimum rent may be either a gross or net rent –Additional rent based on gross sales –Commonly used for large retail stores Example : Monthly minimum rent of $1,000 plus 3 percent annual gross sales in excess of $325,000. Gross sales were $450,700. $450,700 - $325,000 = $125,700 $125,700 x 3% = $3,771 $1,000 x 12 months = $12,000 rent + $3,771 = $15,771 total rent ©2015 Kaplan, Inc.

Variable Lease Rent changes at set times Rent adjustments tied to a price index Also called index lease Example Rent is $12 per square foot with index of 1.5. Index increases to ÷ 1.5 = x $12 per square foot = $14.40 adjusted rental rate ©2015 Kaplan, Inc.

Assignment and Sublease Assignment –When tenant assigns all of leased property for remainder of lease Sublease Two ways to sublet property 1.Tenant assigns a portion of leased property 2.Tenant assigns all property for less than remaining term ©2015 Kaplan, Inc.

Liens Right to have a debt satisfied by some property owned by the debtor Lienholder (lienor) may have the property sold to pay the debt of the owner (lienee) Liens are recorded in the public records (constructive notice) ©2015 Kaplan, Inc.

Voluntary and Involuntary Liens Voluntary Mortgage Vendor’s lien Involuntary Judgment liens Tax liens Construction liens ©2015 Kaplan, Inc.

General and Specific Liens General Judgment liens IRS liens Federal estate tax liens Specific Property tax liens Special assessment liens Mortgages Vendor’s lien Construction (mechanic’s) lien ©2015 Kaplan, Inc.

Lien Priority Superior liens –Property tax –Special assessments –Federal estate tax Junior liens –Priority by recording date Construction lien is an exception –Subordination agreement ©2015 Kaplan, Inc.