Transfer of Title to Real Property
Learning Objectives
 List the methods of transferring title:
• By descent
• Four categories of alienation
• Voluntary, involuntary, during life, or at death
 List and describe the essential elements of deeds in North Carolina
 Describe the three primary types of deeds used in North Carolina
 List the types of special purpose deeds used in North Carolina
 Describe Excise Tax, defining the rate and calculating the amount of tax
 Describe the process of title examination
 Describe title insurance and the types of coverage
 Describe the importance and process of title recordation
 Describe the systems of property description used in North Carolina
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Transfer of Title to Real Property
Property Description
 Adequacy of Description:
• Real property must be described in a legally and professionally acceptable
manner
• Ambiguity in a real property description will likely result in a cloud on the
title to the property
 Methods of describing real property:
• Metes and Bounds –Method most often used in North Carolina:
• Based on distances and direction
• Metes - distance from point to point in the description
• Bounds - direction from one point to another in the description
• Government Rectangular Survey – Not used in North Carolina:
• Divides the country into ranges (6 square miles) using:
• North-south lines called principal meridians, and
• East-west lines called base lines
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Transfer of Title to Real Property
Property Description
 Methods of describing real property:
• Government Rectangular Survey – not used in North Carolina:
• Divides ranges into townships (1 mile square)
• Divides townships into sections (640 acres) which may be further
subdivided
• Description by Reference:
• Reference to recorded plat (lot and block):
• Refers to the plat which determines the exact location and
dimensions of the real property from the metes and bounds
• Often used for real property within subdivisions
• Informal Reference:
• Typically a street address
• Never to be used in a deed or deed of trust
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Transfer of Title to Real Property
Property Description
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Transfer of Title to Real Property
Example #1: How many acres
are in the NE ¼ of the SW ¼
of the NW ¼ of a given
section?
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Transfer of Title to Real Property
Property Description
 Property Survey:
• Determination of location and boundaries of a specific tract of land
with location of buildings, fences, any other structures, and
locations of easements and rights-of-way
• Surveys should be performed by a licensed surveyor or engineer
• Surveys will typically disclose existence of any encroachments
 A metes and bounds descriptions can only be made from a
survey performed by a licensed, registered land surveyor
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Transfer of Title to Real Property
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Transfer of Title to Real Property
Property Description
 Point of Beginning (POB):
• The point of beginning and ending in a metes and bounds
description
 Real property description:
• May contain a statement as to the number of acres or quantity
of land being conveyed
• Number of acres or quantity must yield to the description of
land as defined in the metes and bounds
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Transfer of Title to Real Property
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Transfer of Title to Real Property
Methods of Transferring Title
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By Descent (Intestate Succession)
By Will
By Deed (Voluntary Alienation)
By Involuntary Alienation
• Lien Foreclosure Sale
• Adverse Possession
• Escheat
• Condemnation under Eminent Domain
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Transfer of Title to Real Property
Essential Elements of a Valid Deed

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Must be in writing according to the Statute of Frauds
Grantor – Conveys the deed
Grantee – Receives the deed
Property Description:
• Important that the description distinguishes the subject property from all
other properties
 Words of Conveyance:
• Words demonstrating the grantor’s intention to transfer the title to the
named grantee
 Execution:
• Each grantor must sign conveying his/her interest to the grantee
• The grantee is not required to sign but must be identifiable
 Delivery and Acceptance:
• The valid and executed deed must be delivered by the grantor to the
grantee
• Grantee must accept the deed voluntarily
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Transfer of Title to Real Property
Non-Essential Elements of a Valid Deed
 Acknowledgment (Notarized):
• Does not have to be acknowledged or recorded to be valid and enforceable
• Acknowledgement is necessary before the deed can be recorded, but not
for the validity of the deed
 Consideration:
• The deed does not need to recite the specific consideration given
 Seal:
• Deeds do not have to be sealed in North Carolina to be valid
 Recording:
• Gives constructive notice of grantee’s title to all the world
• Provides protection to the grantee from everyone, including subsequent
purchasers of the same property from the same grantor
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Transfer of Title to Real Property
Non-Essential Elements of a Valid Deed
 Witnessed:
• In North Carolina, it is not necessary for the grantor’s signature
(execution) to be witnessed
 Date:
• Deeds do not have to contain the date to be valid
• The acknowledgement, if any, will provide the date
• A gift deed must be recorded within two years to remain valid
• A date is needed to establish the time of the gift in order to avoid
confusion about the two year period
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Transfer of Title to Real Property
Types of Deeds
 General Warranty Deed:
• Provides most liability for the Grantor
• Least risk for the Grantee
• Covers all claims, even though preceding the Grantor’s ownership of
property
• There are six covenants of a General Warranty Deed:
1. Seisin (Seizin)
2. Right to Convey
3. Against Encumbrances
4. Quiet Enjoyment
5. Warranty
6. Grantees Rights to Recovery
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Transfer of Title to Real Property
Types of Deeds
 Special Warranty Deed:
• Warrants against claims arising during the grantor’s period of ownership
• Does NOT warrant claims arising prior to grantor’s ownership
 Quitclaim Deed (Non-Warranty):
• Used when no warranty is expected or necessary
• Often used to clear a cloud on a title
• Provides least liability for grantor and most risk for grantee
• Typically used for a Special Purpose Deed:
• Deed of Correction (Confirmation)
• Deed of Release
• Deed of Surrender
• Deed of Gift
• Judicial Deed
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Transfer of Title to Real Property
Excise Tax
 Excise Tax (Revenue or Transfer Stamps):
• Amount based on consideration received by the seller in the
sale of the real property by deed
• Excise tax is $1 for every $500 (or portion thereof) of the
full purchase price
• Typically paid for by the seller at closing
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Transfer of Title to Real Property
Title Assurance
 Covenants of Title in Deeds:
• General Warranty Deed covenants – most assurance
• Special Warranty Deed covenants – less assurance
• Quitclaim Deed covenants – no assurance
 Title Examination Procedures:
• Title Examination – used to determine the owner and quality of title.
Limited to recorded documents on public record
• Chain of Title – list of owners during the statutory time period
• Attorney’s Opinion of Title – opinion of who is the legal owner and the
quality of their title
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Transfer of Title to Real Property
Title Assurance
 Title Insurance – coverage that protects the purchaser or mortgagee from
losses due to title defects
• Owner’s Policy:
• Written for the protection of the owner
• Coverage in the amount that the owner paid for the property
• Policy remains in effect for the duration of the insured’s ownership
of the property
• Continues in effect after the owner conveys the property to protect
policy holder from claims of subsequent grantee
• Claims arising during policy holder’s ownership are not covered
during his ownership or against claims of subsequent grantee
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Transfer of Title to Real Property
Title Assurance
 Title Insurance:
• Mortgagee’s Policy:
• Mortgagee is insured against defects in the title pledged
as security in the mortgage
• Coverage is limited to the outstanding balance of the
mortgage
• Leasehold Policy:
• Written to protect a lessee (leaseholder) and/or a
mortgagee against defects in the lessor’s title
• The policy is issued to a mortgagee if the mortgagor has
pledged a leasehold interest instead of a fee simple title
as security for the mortgage debt
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Transfer of Title to Real Property
Title Assurance
 Title Recordation:
• Recordation is not required in North Carolina
• Recordation provides “constructive notice” to third parties
 The Connor Act:
• Certain real estate documents are not valid against third parties until
recorded
• Documents are still valid between the grantor and grantee
• Makes North Carolina a “pure race” state
• Good rule of thumb is if a document has to be in writing according to the
Statute of Frauds it has to be records to protect that interest
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Transfer of Title to Real Property
Title Assurance
 Marketable Title Act:
• The Statute of Limitations for most title defects is 30 years
 The Torrens System:
• Titles for real property are registered in a manner similar to motor vehicles
• A change in the status of the property requires that the old registration
certificate be destroyed and replaced with a new one
• Advantage – eliminates possibility of someone claiming title by adverse
possession
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