1. Conveying Real Property Interests
Chapter 3:
Conveying Real Property Interests
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

2. Complications in Conveying Real Estate
Real property is a complex bundle of rights
Rights to land are enduring: Rights available today depend on transactions long ago
Land is a continuous surface
Boundaries not obvious or natural
Boundary errors always hurt someone
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

3. So, with no title certificates, how do we convey real property?
Deeds
Recorded documents and constructive notice
Title search
Chain of title
Evidence of title
May still not work
Title insurance
Need for adequate property descriptions
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

4. Deeds: The Principal Conveyance of Real Property
Deed: A special, written contract for conveying a permanent interest in real property
Fee simple absolute
Life estate
Conditional fee
Easement
Oil, mineral, or water rights
Must be in writing to be upheld by a court
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

5. Requirements of a Deed Grantor (with signature) and grantee
Recital of consideration
Words of conveyance
Covenants
Habendum clause
Exceptions and reservations clause
Description of land
Acknowledgment
Delivery
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

6. Grantor and Grantee Grantor: Person or entity conveying real property
Must be of legal age
Must be legally competent
Must sign deed
Grantee: Recipient of real property
No need to be of legal of age
No need to be competent
Only needs to be identifiable
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

7. Recital of Consideration and Words of Conveyance
Recital of consideration: A minimal statement suffices: “For 10 dollars and other good and valuable consideration…”
Words of conveyance typically: “Does hereby grant, bargain, sell and convey…”
Functions:
Affirms intention to convey real property
Determines type of deed
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

8. Covenants Covenants: Legally binding promises Three main covenants:
Covenant of seizin: Grantor has good title and right to convey it
Covenant against encumbrances: No encumbrances except as noted in deed (liens, easements)
Covenant of quiet enjoyment: No one with a better claim to title
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

9. Habendum Clause Defines interest being conveyed
“for use as” implies easement
“so long as” implies conditional fee with reverter
“and his/her heirs and assigns forever” implies fee simple absolute
Requires drafting by a knowledgeable legal professional
“Don’t try this at home!”
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

10. Exceptions and Reservations Clause
Deed restrictions
Clauses withholding mineral or oil rights
Creation of an easement
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

11. Describing Real Property
Property descriptions
Must be unambiguous and enduring
Three methods acceptable for public records:
Metes and bounds
Plat lot and block number
Government rectangular survey
Unacceptable descriptions include street address and tax parcel number
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

12. Acknowledgment and Delivery
Acknowledgment: Confirmation that grantor acted voluntarily
Notarized or equivalent (some states require witnesses)
Delivery: Observable, verifiable intent that deed is to be given to grantee
Examples of failure of delivery:
Deed found in a desk/safety deposit box and handed to named grantee
Grantor’s attorney hands deed to named grantee without explicit instructions to do so
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

13. How Deeds Differ
Key point: No deed conveys rights that grantor does not have
Deeds differ by number of covenants
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

14. Types of Deeds
General warranty deed: All three covenants; seizing, no encumbrances, and quiet enjoyment
Special warranty deed: All three covenants but “no encumbrances” limited to grantor’s ownership
Deed of bargain and sale: No covenants, but still is regarded as implying ownership
Quitclaim deed: No covenants and makes no assertions about grantor’s interest
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

15. Review of Deeds Covenants by Grantor Type of Deed Quiet Enjoyment:
No Encumbrances:
Seizen:
Will defend
grantee against
claims of others
No undisclosed
restrictions or
conflicting claims
Has valid
title
Type of Deed
General Warranty*
Yes!
Yes!
Yes!
Special Warranty
Yes!
Yes!
Ltd! ? ?
Bargain and Sale
Implied
Quitclaim
No!
No!
No!
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

16. The Significance of Covenants
Covenants do not assure that a grantor can deliver property as described.
The give the grantee a legal basis to sue the grantor if there is failure to deliver.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

17. It’s Hard to Know What You Are Getting!
Complex bundle of rights
Long history of ownership
Problem of accurate boundary description
PLUS! Multiple ways that title may have transferred, some with no record
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

18. Modes of Conveying Real Property
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

19. Ways Title Can Transfer
Voluntary conveyance by deed
Ordinary sale and transfer of title
Involuntary conveyance by deed
Probate (distribution of estate)
Bankruptcy
Divorce settlement
Condemnation
Foreclosure
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

20. Ways Title Can Transfer (continued)
Voluntary conveyances without a deed (easements only)
Implied easement
Easement by prior use or necessity
Easement by estoppel
Involuntary conveyance without deed
Easement by prescription
Title by adverse possession
Action of water (accretion, reliction)
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

21. Questions
Why can a single document – a “title” – never serve as proof of real property ownership?
If no single document can confirm title, what do we mean by “title”?
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

22. Doctrine of Constructive Notice
If you are able to know of a deed or other real property conveyance, you must accept it.
Any such document placed in public records and freely available to you or your knowledgeable representative, is considered to be knowable.
This is true even if you never look at the document.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

23. Public Records, Notice and Real Property Conveyance
Doctrine of constructive notice: Cannot be bound by what you cannot know
Statute of Frauds: Contract must be written to be enforceable
Recording statutes: A contract recorded in public records is considered known
Actual notice: Open, continuous, actual possession of property
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

24. Creating Evidence of Title
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

25. The Meaning of “Title”
Title: Collection of evidence indicating a particular person(s) as holder of the “fee”
Title search: Examining public records to construct “chain of title”
Chain of title: the sequence of conveyances passing ownership down through time
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

26. Possible Breaks in the Chain of Title
Conveyance of only a partial interest?
Cloud to Title
Conveyance by adverse possession?
Inconsistent property descriptions?
Fraudulent documents?
Inferior deed?
Faulty separation of
mineral or water rights?
Missing spousal signature?
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

27. Evidence of Title
Evidence of title: Assurance of a good or marketable title
Marketable title: Claim to title is regarded as free from reasonable doubt
Two main forms of “evidence of title”
Title abstract with attorney’s opinion: Summary of all records in chain of title reviewed by an attorney for completeness
Title insurance commitment: Indemnifies grantee if challenge to title arises
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

28. Title Insurance
Protects a grantee (or mortgage lender) against a flaw in title, or the loss of title
Covers litigation cost and loss of value
Covers no other hazards
Cannot restore rights that do not exist
Unusual form of insurance: single up-front premium for “lifetime” coverage
Controversy about cost and coverage
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

29. But how far back do title risks really go?
The earlier the event the more likely it has been settled.
More recent transactions are the greater risk.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

30. Marketable Title Laws State laws to shorten necessary title search
Root of title: Most recent title conveyance (deed) being a minimum number of years old
To be enforceable certain interests may need to be reasserted by documents no older than root of title
Restrictive covenants
Some easements
Title unbroken back to its root is normally regarded as marketable
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

31. “Legal” Land Descriptions
Metes and Bounds
Oldest form
Directed distances (a trip around the property)
Government Rectangular survey
Covers “newer” parts of the US (post Revolution)
Mostly for rural and undeveloped land
Plat lot and block number
Most urban property (any property in a sub-division)
Preferred choice.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

32. Methods of Land Description: Metes and Bounds
A sequence of directed distances:
Compass directed “walk around property”
Establishing point of beginning is critical
Oldest form of acceptable land description
Most flexible form
Most difficult to interpret
Should be made or interpreted only by surveyors
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

33. Metes and Bounds Description: Example
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

34. Methods of Land Description: Subdivision Plat Lot and Block Number
Subdivision survey map in public records identifies lot by block and lot number
Lot and block number sufficient to describe parcel
Dominant form of urban land description
Map shows numerous features
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

35. Subdivision Plat Lot and Block: Example
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

36. Methods of Land Description: Government Rectangular Survey
Basic reference points
Baseline
Principal meridian
Measures of distance
Range lines
Tier lines
Units
Township
Section
Check
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

37. Baselines and Principal Meridians of the United States
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

38. Township Identification
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

39. A Township
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

40. Tallahassee Jacksonville Township: Range 27 E, Tier 24 S Orlando
Tallahassee Principal Meridian
Tallahassee R 26 E 27 2 1 W
T 2 N
Jacksonville
Base Line
T 1 N
T 1 S
T 2 S
Township:
Range 27 E,
Tier 24 S R 2 E 1 W
Orlando 6 1 2 3 4 5 7 8 9 11 10 12 18 13 14 15 16 17 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
T 23 S
T 24 S
NW 1/4
of NE 1/4 NW
1/4 SW SE
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

41. Subdividing a Section
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

42. Benchmark Numbers for Real Estate
Section:
Described square mile within government rectangular survey
640 acres
Acre
43,560 square feet
Area of a football field from one goal line to the opposite 10 yard line
Size of the public area of large supermarkets.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

43. Why not street address or tax parcel number?
Many inaccuracies in street address and tax parcel number
They don’t give boundaries, only a point
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

44. Summing up Three challenges to overcome in conveying real property:
Complexity of the “bundle” of rights
History of ownership
Boundaries
Deeds as central
Role of covenants – general warranty, special warranty, bargain and sale, quitclaim
Cannot prove ownership
Doctrine of constructive notice and recording statutes
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

45. Summing up still more Title search and chain of title
“Clouds to title”
Marketable title
Evidence of title
Interests can convey without a deed
Title insurance
Property descriptions
Metes and bounds
Subdivision plat lot and block
Government rectangular survey
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

46. End of Chapter 3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.