Chapter 3
Conveying Real Property Interests
Real Estate
FIN 331
Fall 2013
SOURCES OF COMPLEXITY IN
CONVEYING REAL PROPERTY
A. Real property is a complex bundle of
rights
B. Rights to land are enduring: Rights
available today depend on transactions
long ago
C. Land is a continuous surface
a. Boundaries not obvious or natural
b. Boundary errors always hurt someone
DEEDS –
CONVEYING REAL PROPERTY
A. Deed: A special, written contract for conveying a permanent
interest in real property
B. Requirements for a Deed
1.
Grantor (with signature) and grantee
grantor must be of legal age and competent
2.
3.
4.
Recital of consideration: “for [ten] dollars and other good and
valuable consideration…”
Words of conveyance: “does hereby grant, bargain, sell, and
convey unto…”
Covenants
a. Covenant of seizin: promise that grantor truly has good title and right
convey it
b. Covenant against encumbrances: no liens, easements, or other
limitations except as noted in the date
c. Covenant of quiet enjoyment: the premise that property cannot be
claimed by someone else with a better title
DEEDS –
CONVEYING REAL PROPERTY
5. Habendum clause: defines or limits the type
of interest being conveyed
6. Exceptions and reservations class (if any)
7. Description of land: legal descriptions are
metes and bounds, subdivision plat and block
number, in government rectangular survey
8. Acknowledgment
9. Delivery: a deed must be “delivered” in order
to be valid
TYPES OF DEEDS
A. General warranty deed: All three covenants;
seizin, no encumbrances, and quiet
enjoyment
B. Special warranty deed: identical to general
warranty deed except as limited to the time
of the grantor’s ownership
C. Deed of bargain and sale: No covenants, but
still is regarded as implying ownership
D. Quitclaim deed: No covenants and makes no
assertions about grantor’s interest
TYPES OF DEEDS
E. Judicial Deeds and Trustee’s Deeds
1. Judicial deeds are the result of a court
ordered proceeding
2. Trustee’s deeds are issued by the trustee in a
court supervised disposition of property
Modes of Conveyance of Real Property
A. Voluntary conveyance by deed
1. Ordinary sale and transfer of title
B. Voluntary conveyance without a deed
1. Implied easement: utility easements
2. Easement by estoppel: permission to use by
adjacent landholder
3. Dedication: When a developer dedicates
street rights-of-way and open spaces
Modes of Conveyance of Real Property
C. Involuntary conveyance by deed
1.
2.
3.
4.
5.
Probate (distribution of estate)
Bankruptcy
Divorce settlement
Condemnation
Foreclosure
D. Involuntary conveyance without a Deed
1. Landowner involuntarily and unknowingly gives up
rights to land
2. Easement by prescription
3. Title by adverse possession
4. Title by adverse possession
Modes of Conveyance of Real Property
E. Gain rights to land through the action of
water (accretion, reliction)
1. Accretion: enlargement by natural action
2. Reliction: gradual change of water line on
real property which gives the owner more
dry land.
Importance of Public Records
A. Doctrine of constructive notice: Cannot be bound
by claims or rules he or she has no means of
knowing
B. Statute of Frauds (1677): Contracts conveying a
real property interest must be written to be
enforceable
C. Recording statutes: A contract recorded in public
records is considered known
D. Actual notice: Open, continuous, actual possession
of property
E. Public records provide information for a “Title”
search
Defining “Title”
A. Title: Collection of evidence indicating a
particular person(s) as holder of the “fee”
B. Title search: Examining public records to
construct “chain of title”
C. Chain of title: the sequence of conveyances
passing ownership down through time
D. Evidence of Title
1. Title abstract together with an attorney’s opinion of
title
2. Title insurance commitment
3. Title insurance protects the grantee against the legal
costs of defending the title and against loss of the
property in case of an unsuccessful defense
Defining “Title”
E. Potential Problems with Titles: (Motives
for Title Insurance)
1. Conveyance of partial interest or adverse
possession
2. Inconsistent property descriptions
3. Missing signatures
4. Faulty separation of mineral or water rights
Land Descriptions
A. Metes and Bounds
1. Metes refers to measures
2. Bounds refers to identifiable boundaries
surrounding parcels of land
B. Subdivision Plat Lot and Block Number
C. Government Rectangular Survey:
townships identified by range and tier
lines
HOMEWORK ASSIGNMENT
A. Key terms: Accretion – Reliction, Adverse
Possession, Covenant of Seizin, Types of Deeds (7),
Doctrine of Constructive Notice, Easement by
Estoppel, Encroachment, Habendum Clause,
Metes and Bounds, Title Abstract / Insurance
B. Study Questions: 1, 2, 4, 5
C. Issues to Ponder: Smith bought a repossessed
property from the bank. A year later, Smith
decides to have the property surveyed. Smith
discovers that the adjoining neighbor’s fence is
actually on Smith’s property. What are the issues
involved?