How can I tell if the deed is a valid legal transfer of ownership
WHAT IS A DEED?
A deed is the legal name for the document which transfers ownership of real estate. California state law has specific requirements for a deed to be valid. In a typical home sale or transfer, the deed will be prepared by the escrow company or by the attorney handling the transfer. Further, in a typical sale, there is title insurance paid for by the seller and the title insurance company always reviews the deed to make sure that it is legally correct and proper.
Example of a Grant Deed
REQUIREMENTS FOR A VALID DEED
Whomever is preparing the deed for the transaction is charged with creating a document that fulfills all the requirements of California law. First, the deed must be in writing and have the names of the grantor and grantee. The grantor is the person selling or giving the property and the grantee is the person buying or receiving the property. Second, there must be a sufficient description of the property which typically is a legal description with an assessor’s parcel number although in some instances a lesser description will suffice. Third, there must be proper “words of conveyance”. Fourth, the grantor must be legally competent. Fifth, the deed must be signed by the grantor or the grantor’s legal representative. Sixth, the deed must be delivered to the grantee and it is effective upon delivery. For example, if a grantor signs a deed and it is delivered, and then the grantor dies before the deed is recorded with the County recorder, the transfer is still valid because it was delivered.
Is not necessary for the deed to be recorded with the County recorder and it is not necessary for the signature of the grantor to be acknowledged by a Notary Public. However, deeds are typically recorded and before they can be recorded they must have the signatures acknowledged by a Notary Public. In a normal house sale situation which is done through an escrow company and/or in connection with real estate attorneys, all signatures are acknowledged by Notary Public and the deed is recorded. However, in some estate situations people sign deeds before they can get to a Notary Public or deeds don’t get recorded when they were supposed to have been recorded and so litigation can arise to determine if the deed is valid and if it actually transfers legal ownership of the property in question.
Also, it is not necessary for there to be legal consideration or payment as part of the transaction for the deed to be valid. An example of this is a gift deed whereby parents transfer of property to their children for no consideration which means no payment.
COMMON TYPES OF DEEDS
There are subcategories of valid deeds, depending upon the words of conveyance. The most widely used deed is a “grant deed”. The words of conveyance in a grant deed states that the grantor is granting the specified property to the grantee. The law implies that the grantor owns the property being conveyed, has not conveyed the same property to anybody else and that the property is free of encumbrances placed on the property If there are encumbrances on the property there would be additional words stating that the grant is ”subject to all liens and encumbrances”.
Another common form of deed is a ”quitclaim deed”. The operative words of conveyance in a quitclaim deed are typically that the grantor “remises, releases, and quitclaims” the property. It transfers only whatever legal or equitable interest the grantor has at the time the deed is executed and doesn’t imply that the grantor actually owns the property. A quitclaim deed is typically used in a divorce property settlement or in other circumstances where it is necessary to make sure that the grantor doesn’t claim any interest in the property at some future time. In the context of estate planning, as well as in divorce settlement, lawyers and title insurance companies often want a spouse who actually has no ownership in a particular piece of property to sign a quitclaim deed just to make sure. Another example would be a situation where a married person inherited a property from his parents and was owned as his sole and separate property and then was going to sell the property. As part of the sale transaction, the spouse of the seller would need to sign a quitclaim deed so that the buyer could be assured that the spouse would not later be making a claim to the property.
Example of a Quitclaim Deed
REASONS FOR RECORDING DEEDS
These are typically recorded to provide notification to the general public as to who owns a particular property. The recording also notifies the property tax authorities as to who is responsible for paying the property taxes. These are also recorded to prevent fraud or double sales of the same property. Recording is important especially to the grantee so that the grantor is prevented from effectively transferring the same property to a different person. Under California law, once a property deed is recorded, it is considered notification to all the world of the transfer. For example, if a grantor delivers a deed to grantee #1 today and grantee #1 records the deed today then grantee #1 is safe from the grantor fraudulently getting a deed to somebody else. Thus, if the grantor gives another deed to the same property to grantee #2 tomorrow, that person receiving the deed tomorrow is considered to have legal notice of the recording that was done today by grantee #1 and therefore cannot claim valid ownership of the property. Grantee #1 does not have to prove that the grantee #2 somehow had actual knowledge of the sale or transfer to grantee #1. That is the point of the law that says that the recorded deed has in effect notified the grantee #2 so the grantee #2 cannot possibly claim legal ownership.
STATUS OF THE GRANTEE
Because California law respects and designates between community property and separate property of married persons and for other reasons the status of the grantee is recited in the deed. It is customary to show the marital status of the grantee and described them as husband and wife if the property is to be community property. Other common status designations are: an unmarried man or woman; husband and wife; a married man or woman as his or her separate property; and as a trustee of a trust. A proper status designation is always required by title companies.
NATURE OF THE ESTATE
Unless otherwise specified, a deed is presumed to pass ownership in fee (in full) without any restrictions. Other estates that can be transferred by these are life estates, estates for years and estates at will. Any of these latter types of estates have to be very carefully defined in the deed so that it is possible to determine what the grantee is receiving and for how long and under what restrictions or conditions. Also, if there are multiple owners of the property they should be specified as well and the type of ownership needs to be stated. Multiple ownership may be as joint tenants, as tenancy in common, as community pr
operty, or as partnership interests. These words have special legal meaning in the law. People owning as joint tenants are under the arrangement that when one of them dies the other obtains ownership of the property 100%. People owning as tenants in common are under the arrangement that the share owned by each is transferred to that person’s heirs upon their death. People owning as community property are somewhat akin to owning as joint tenants in that upon the death of one of the married owners, the other succeeds to 100% ownership of the property.
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ESTATE PLANNING CONSIDERATIONS
When people rearrange their affairs to establish a living trust, the legal titles to their real estate are typically taken out of being joint tenants or being owned as community property. The property in a living trust is typically owned by the trustees under the living trust so that the instructions for property ownership succession in the living trust are followed. For example, if a person owned a property in joint tenancy with his brother, and then he establishes a living trust to leave his ½ to his wife, but failed to put his ½ of the property into the trust, when he dies he brother would get the property. The heirs of the deceased person mentioned in the trust would not get any part of the property since the property was not put into the trust and was still in joint tenancy as of the date of death. Part of a typical estate planning set up is to thoroughly discuss how the legal title is to be held to all properties involved in the trust and usually properties are taken out of joint tenancy ownership.
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