Conveying Real Property Interests

Chapter 3:
Conveying Real
Property Interests
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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
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
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
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
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
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:
1.Affirms intention to convey real property
2.Determines type of deed
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
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!”
Exceptions and Reservations
Clause
 Exceptions and reservations clause
 Deed restrictions
 Clauses withholding mineral or oil rights
 Creation of an easement
Describing Real Property
 Property descriptions
 Must be unambiguous and enduring
 Three methods acceptable for public records:
1. Metes and bounds
2. Plat lot and block number
3. Government rectangular survey
 Unacceptable descriptions include street
address and tax parcel number
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
How Deeds Differ
 Key point: No deed conveys rights that

grantor does not have
 Deeds differ by number of covenants
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
Review of Deeds
Covenants by Grantor
Quiet No
Seizen: Enjoyment: Encumbrances:
Has valid Will defend No undisclosed
title grantee against restrictions or
claims of others conflicting claims
Type of Deed
General Warranty* Yes! Yes! Yes!
Special Warranty Yes! Yes! Ltd!
Bargain and Sale li e d ? ?

Im p
Quitclaim No! No! No!

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.
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
Modes of Conveying Real Property
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
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)
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”?
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.
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
Creating Evidence of Title
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
Possible Breaks in the
Chain of Title
Conveyance of only a partial interest?
Conveyance by adverse possession?

Inconsistent property descriptions?
Fraudulent documents?
Inferior deed?
Faulty separation of
mineral or water rights?
Missing spousal signature?

Cloud to Title
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
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
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.
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
“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.
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
Metes and Bounds Description: Example
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
Subdivision Plat Lot and Block: Example
Government Rectangular Survey
 Basic reference points
 Baseline
 Principal meridian
 Measures of distance
 Range lines
 Tier lines
 Units
 Township
 Section
 Check
Baselines and Principal Meridians of the
United States
Township Identification
A Township
Tallahassee Principal Meridian
Tallahassee
T2N
Base Line T1N Jacksonville
T1S
T2S
Township: R R R R
2 1 1 2
Range 27 E, WW E E
Tier 24 S 2 1
Orlando
6 5 4 3
T 23 S
7 8 9 10 11 12
T 24 S
18 17 16 15 14 13
R R
NW 1/4 19 20 21 22 23 24 2 2
6 7
of NE 1/4 30 29 28 27 26 25
E E
31 32 33 34 35 36
NW
1/4
SW SE
1/4 1/4
Subdividing a Section
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.
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
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
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
End of Chapter 3

Conveying Real Property Interests

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Conveying Real Property Interests

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Chapter 3:

 Real property is a complex bundle of

 Key point: No deed conveys rights that

Special Warranty Yes! Yes! Ltd!

Bargain and Sale li e d ? ?

Quitclaim No! No! No!

 Covenants do not assure that a grantor

 Voluntary conveyances without a deed

 Why can a single document – a “title” –

 If no single document can confirm title,

 If you are able to know of a deed or other

 Title: Collection of evidence indicating

Conveyance of only a partial interest?

Conveyance by adverse possession?

Missing spousal signature?

 Protects a grantee (or mortgage lender)

 Metes and Bounds

 Subdivision survey map in public

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