Real Estate Law

Deeds

Real Estate Law

Deeds

DeedsDeeds

Subjects Covered:Subjects Covered:

Legal Requirements of a Legal Requirements of a DeedDeed

Deed ClausesDeed Clauses Common Types of DeedsCommon Types of Deeds Special Purpose DeedsSpecial Purpose Deeds Recording Deeds and Other Recording Deeds and Other

Real Estate DocumentsReal Estate Documents

DeedsDeeds

Definition:Definition:

Written instrument by which owner of real Written instrument by which owner of real property intentionally conveys to property intentionally conveys to Purchaser his right, title or interest in Purchaser his right, title or interest in parcel of real property.parcel of real property.

Legal Requirements of a DeedLegal Requirements of a Deed

1.1. Writing and ExecutionWriting and Execution

Required by the Statute of Frauds (Required by the Statute of Frauds (M.G.L. M.G.L. Chapter 183, Section 4)Chapter 183, Section 4)

2.2. Competent Grantor and Named GranteeCompetent Grantor and Named Grantee

3.3. DateDate

4.4. ConsiderationConsideration

““Valuable” consideration (i.e., money) or Valuable” consideration (i.e., money) or “good” consideration (e.g., love and “good” consideration (e.g., love and affection)affection)

Legal Requirements of a Deed (cont’d)Legal Requirements of a Deed (cont’d)

5.5. Words of ConveyanceWords of Conveyance

Every deed must show a Every deed must show a present intentpresent intent on part on part of Grantor to transfer his interest to of Grantor to transfer his interest to Grantor.Grantor.

6.6. Legal Description of LandLegal Description of Land Must be Must be as precise and clear as possibleas precise and clear as possible. .

Purpose of legal description is to fix the Purpose of legal description is to fix the boundaries of land intended to be sold. boundaries of land intended to be sold.

Types of legal descriptionsTypes of legal descriptions: Metes and Bounds, Plats, : Metes and Bounds, Plats, Government Survey.Government Survey.

In Massachusetts, legal description must include In Massachusetts, legal description must include street or address of the property, metes and street or address of the property, metes and bounds description, and reference description.bounds description, and reference description.

Legal Requirements of a Deed (cont’d)Legal Requirements of a Deed (cont’d)

7.7. Exceptions and ReservationsExceptions and Reservations (if (if applicable)applicable)

ExceptionException = Part of real estate which will = Part of real estate which will not not be conveyedbe conveyed because it has already been because it has already been excepted from property. excepted from property. ReservationsReservations = = Part of the real estate which Part of the real estate which Grantor carves Grantor carves out for himself or othersout for himself or others at time property is at time property is conveyed.conveyed.

8.8. Release of Homestead and/or Elective Release of Homestead and/or Elective Share RightsShare Rights (if applicable) (if applicable)

Legal Requirements of a Deed (cont’d)Legal Requirements of a Deed (cont’d)

9.9. Delivery and AcceptanceDelivery and Acceptance

A deed is A deed is delivered when Grantor does or says delivered when Grantor does or says something to something to show intentionshow intention to pass to pass ownership of land to Granteeownership of land to Grantee. Must make . Must make delivery during lifetime of Grantor.delivery during lifetime of Grantor.

DeliveryDelivery

BASIC PRINCIPLES:BASIC PRINCIPLES:

a.a. Delivery to Grantee.Delivery to Grantee. Delivery is presumed when Grantee takes Delivery is presumed when Grantee takes physical possession of deed, but presumption physical possession of deed, but presumption can be rebutted by evidence. Also, no delivery can be rebutted by evidence. Also, no delivery if Grantor retains possession of deed, but again if Grantor retains possession of deed, but again evidence can be introduced to rebut evidence can be introduced to rebut presumption. presumption.

Delivery (cont’d)Delivery (cont’d)

b.b. Delivery to Grantee on Oral Condition.Delivery to Grantee on Oral Condition.

Conditions are OK, but must be written down.Conditions are OK, but must be written down.

c.c. Delivery to Third Party Agent.Delivery to Third Party Agent. If If deliverydelivery is made is made to agent of Granteeto agent of Grantee -- -- then then goodgood delivery. If delivery. If deliverydelivery is made is made to to agent of Grantoragent of Grantor -- -- nono delivery since there delivery since there is no intention to transfer ownership.is no intention to transfer ownership.

Delivery (cont’d)Delivery (cont’d)

d.d. Delivery to Third Party with Conditions.Delivery to Third Party with Conditions. Escrow arrangementEscrow arrangement

Deed is delivered in escrow when it is deposited with Deed is delivered in escrow when it is deposited with third party with directions to deliver to Grantee upon third party with directions to deliver to Grantee upon performance of some condition set forth in escrow performance of some condition set forth in escrow instructions, not in deed.instructions, not in deed.

Requirements for valid escrowRequirements for valid escrow::1.1. Must be a valid and enforceable contract for sale of Must be a valid and enforceable contract for sale of

land. The escrow itself may serve as contract for land. land. The escrow itself may serve as contract for land.

2.2. Escrow agreement must contain a condition -- Escrow agreement must contain a condition -- something that must be done before Buyer's money is something that must be done before Buyer's money is paid to Seller. paid to Seller.

3.3. Deed must otherwise be valid.Deed must otherwise be valid.

4.4. Escrow holder must be third party.Escrow holder must be third party.

Other Requirements of a DeedOther Requirements of a Deed

To be To be recordablerecordable in Massachusetts, the deed in Massachusetts, the deed must also:must also: Clearly and completely state the purchase price Clearly and completely state the purchase price

or full value of the consideration – this must be or full value of the consideration – this must be disclosed for the purpose of purchasing transfer disclosed for the purpose of purchasing transfer tax stamps.tax stamps.

(2010 Massachusetts Excise Tax on real property (2010 Massachusetts Excise Tax on real property transfers is $2.28 per each $500 of transfers is $2.28 per each $500 of consideration; there is no tax on transfers where consideration; there is no tax on transfers where the consideration is less than $100.)the consideration is less than $100.)

Be acknowledged before a Notary Public.Be acknowledged before a Notary Public.

Non-Requirements of a DeedNon-Requirements of a Deed

The following are The following are notnot required in required in Massachusetts:Massachusetts: WitnessesWitnesses

SealSeal

Recording (except Registered Land)Recording (except Registered Land)

Deed ClausesDeed Clauses

Premises clause:Premises clause: The opening paragraph of a deed, setting forth the date of The opening paragraph of a deed, setting forth the date of execution of the deed, the parties to the deed, and, in execution of the deed, the parties to the deed, and, in states that so require, the addresses of the parties.states that so require, the addresses of the parties.

Granting clause:Granting clause: A clause that contains the words of conveyance expressing A clause that contains the words of conveyance expressing the grantor’s intention of transferring the real property. It the grantor’s intention of transferring the real property. It also includes the recital of consideration and description of also includes the recital of consideration and description of the property to be conveyed.the property to be conveyed.

Tenendum clause:Tenendum clause:AA clause indicating the improvements that are being conveyed together with the land, such as the buildings built on the land.

Deed Clauses (cont’d)Deed Clauses (cont’d)

________________________________, [an individual, partnership, or

corporate entity], with an address of __________________________

(“Grantor”), for consideration paid, and in full consideration of

___________________, grants to _______________________, [an individual

or corporate entity], having a mailing address of

____________________________ (“Grantee”), with [TYPE OF DEED]

COVENANTS, that certain parcel of land, together with the

improvements thereon located at [Property Address] in [City, County,

State],

And being described as: [Full legal description of property]

Example of combined Premises, Granting, and Example of combined Premises, Granting, and Tenendum clause:Tenendum clause:

Deed ClausesDeed Clauses

Encumbrance clause:Encumbrance clause:A clause setting forth any encumbrances on the real A clause setting forth any encumbrances on the real property conveyed, such as mortgages, leases, liens, property conveyed, such as mortgages, leases, liens, easements, or restrictions.easements, or restrictions.

The above-described premises also are conveyed subject to and with

the benefit of all agreements, easements, appurtenances and

restrictions of record insofar as now in force and applicable. The

above-described premises are also conveyed subject to all taxes for

fiscal year ___________.

Example:Example:

Definition:Definition:

Charge or burden on property that may diminish Charge or burden on property that may diminish its value or obstruct use of property, BUT does its value or obstruct use of property, BUT does not necessarily prevent transfer of title.not necessarily prevent transfer of title.

Two Types of EncumbrancesTwo Types of Encumbrances

1.1. Monetary encumbrances or liens -- affect Monetary encumbrances or liens -- affect titletitle

2.2. Non-monetary encumbrances -- affect Non-monetary encumbrances -- affect physical condition and use of propertyphysical condition and use of property

EncumbrancesEncumbrances

MonetaryMonetaryEncumbrancesEncumbrances

LiensLiens Real Estate TaxesReal Estate Taxes MortgagesMortgages Mechanic’s LiensMechanic’s Liens JudgmentsJudgments

NonmonetaryNonmonetaryEncumbrancesEncumbrances

EncroachmentsEncroachments LicensesLicenses Deed Deed

Restrictions/CovenaRestrictions/Covenantsnts

EasementsEasements1.1. AppurtenantAppurtenant

2.2. In GrossIn Gross

3.3. By NecessityBy Necessity

4.4. By PrescriptionBy Prescription

EncumbrancesEncumbrances

Deed ClausesDeed Clauses

Testimonium clause:Testimonium clause:A clause in which the deed is executedA clause in which the deed is executed

EXECUTED under seal this ___ day of ________________, _____.

[ENTITY NAME IF NECESSARY]

________________________________

Name: __________________________

Title: ____________________________

[if appropriate]

Example:Example:

Deed ClausesDeed Clauses

Habendum clause:Habendum clause: A clause describing the type of estate being conveyed to the A clause describing the type of estate being conveyed to the grantee(s). In Massachusetts, if not otherwise stated, grantee(s). In Massachusetts, if not otherwise stated, presumption is Fee Simple Absolute; if to more than one party presumption is Fee Simple Absolute; if to more than one party and not otherwise stated, presumption is Tenancy in Common.and not otherwise stated, presumption is Tenancy in Common.

Seisin clause:Seisin clause:A clause whereby the grantor warrants that he/she is the A clause whereby the grantor warrants that he/she is the rightful owner of the property in question and thereby has the rightful owner of the property in question and thereby has the right and power to convey the property to the grantee. It is right and power to convey the property to the grantee. It is found in general warranty deeds and special warranty deeds.found in general warranty deeds and special warranty deeds.

Reddendum clause:Reddendum clause: A clause reserving some right in the real property for the A clause reserving some right in the real property for the grantor or imposing a restriction on use of the property by the grantor or imposing a restriction on use of the property by the grantee.grantee.

Common Types of DeedsCommon Types of Deeds

Quit Claim DeedQuit Claim Deed

Contains NO warranties. Contains NO warranties.

Conveys only Grantor's present interestConveys only Grantor's present interest in in land. (i.e., whatever title or interest land. (i.e., whatever title or interest Grantor has). Grantor has).

Most common form of deed.Most common form of deed.

Common Types of Deeds (cont’d)Common Types of Deeds (cont’d)

General Warranty DeedGeneral Warranty Deed

Seller provides Purchaser with 3 warranties. Seller provides Purchaser with 3 warranties. These covenants transfer with the land to all These covenants transfer with the land to all successors in interest of Grantee. (i.e., A successors in interest of Grantee. (i.e., A gives general warranty deed to B. B sells to gives general warranty deed to B. B sells to C. A is liable to C on any future covenants.)C. A is liable to C on any future covenants.)

1.1. Covenant of TitleCovenant of Title

2.2. Covenant Against EncumbrancesCovenant Against Encumbrances

3.3. Covenant of Quiet EnjoymentCovenant of Quiet Enjoyment

Common Types of Deeds (cont’d)Common Types of Deeds (cont’d)

Special Warranty DeedSpecial Warranty Deed

Grantor covenants only against lawful claims Grantor covenants only against lawful claims of all persons that arise "under, by or of all persons that arise "under, by or through" Grantor. (i.e., through" Grantor. (i.e., claims arising through claims arising through acts of Grantor himself, not acts of others.acts of Grantor himself, not acts of others.))

Bargain and Sale DeedBargain and Sale Deed

A deed that transfers the real property itself A deed that transfers the real property itself rather than transferring any particular rather than transferring any particular interest in the property.interest in the property.

Special-Purpose DeedsSpecial-Purpose Deeds

Corrective DeedsCorrective Deeds

Deeds Conveying Government-Owned Deeds Conveying Government-Owned PropertyProperty

Fiduciary DeedsFiduciary Deeds Personal Representatives’ DeedsPersonal Representatives’ Deeds

Guardians’ DeedsGuardians’ Deeds

Sheriffs’ or Referees’ DeedsSheriffs’ or Referees’ Deeds

RecordingRecording

Definition:Definition:

Delivering a document to the appropriate government Delivering a document to the appropriate government official for transcription into a plat book, deed book official for transcription into a plat book, deed book mortgage book, or official records book.mortgage book, or official records book.

Purpose:Purpose:To put the public on notice regarding the information To put the public on notice regarding the information contained in the document.contained in the document.

Constructive notice: notice legally presumed Constructive notice: notice legally presumed because of the recording of documents in the because of the recording of documents in the public records. public records.

Actual notice: direct knowledge a person has Actual notice: direct knowledge a person has about the ownership and condition of the real about the ownership and condition of the real property.property.

Notice ConceptsNotice Concepts

All Buyers and Lenders are charged with All Buyers and Lenders are charged with constructive constructive noticenotice

Contrast with Contrast with actual noticeactual notice -- everything the Buyer has -- everything the Buyer has direct knowledge ofdirect knowledge of

ILLUSTRATIONILLUSTRATION  

Bill mortgages land to Jane. Jane does not record mortgage, but Bill mortgages land to Jane. Jane does not record mortgage, but she does take possession of land. Bill later mortgages same she does take possession of land. Bill later mortgages same land to Ed, who knows of earlier mortgage to Jane. Thus, Ed is land to Ed, who knows of earlier mortgage to Jane. Thus, Ed is charged with actual knowledge, so his mortgage is second to charged with actual knowledge, so his mortgage is second to Jane's mortgage. Jane's mortgage.

ILLUSTRATIONILLUSTRATION

Bill conveys land to Jane, who records deed. Then Bill persuades Bill conveys land to Jane, who records deed. Then Bill persuades Ed to buy the same land, telling Ed he owns land. Ed fails to Ed to buy the same land, telling Ed he owns land. Ed fails to examine title. Ed has constructive notice of deed to Jane, Jane examine title. Ed has constructive notice of deed to Jane, Jane has priority.has priority.

Recording StatutesRecording Statutes

Definition:Definition: A statute that prescribes the requirements for A statute that prescribes the requirements for recording a document and that determines the recording a document and that determines the priority of rights to real property if there are priority of rights to real property if there are conflicting claims.conflicting claims.

Bona fide purchaser for value:Bona fide purchaser for value: Someone who purchases property in good faith Someone who purchases property in good faith and for valid consideration.and for valid consideration.

Recording Statutes (cont’d)Recording Statutes (cont’d)

Three types of recording statutes:Three types of recording statutes:

1.1. Race statute:Race statute:

A recording statute whereby priority of A recording statute whereby priority of claim of title of real property is determined claim of title of real property is determined literally by a race to the recording office.literally by a race to the recording office.

Unrecorded deed not valid against later Unrecorded deed not valid against later bona-fide purchasers - bona-fide purchasers bona-fide purchasers - bona-fide purchasers win.win.

Recording Statutes (cont’d)Recording Statutes (cont’d)

2.2. Notice statute:Notice statute:

A recording statute whereby the notice a A recording statute whereby the notice a subsequent purchaser has of a previous subsequent purchaser has of a previous purchaser’s deed is imperative in determining purchaser’s deed is imperative in determining the priority of title to the real propertythe priority of title to the real property.

Later Bona-Fide Purchaser only has priority Later Bona-Fide Purchaser only has priority ifif he records first. Thus, subsequent he records first. Thus, subsequent purchasers must be (1) bona-fide purchasers, purchasers must be (1) bona-fide purchasers, and (2) record first to have priority.and (2) record first to have priority.

Recording Statutes (cont’d)Recording Statutes (cont’d)

3.3. Race-notice statute:Race-notice statute:

A recording statute premised on protecting A recording statute premised on protecting a bona fide purchaser for value without a bona fide purchaser for value without notice if he/she is the first to record the notice if he/she is the first to record the deed to real property. deed to real property.

First to record wins, therefore has title. No First to record wins, therefore has title. No need for subsequent purchaser to be bona-need for subsequent purchaser to be bona-fide.fide.

(This is the most common form of recording (This is the most common form of recording statute.)statute.)

Recording Statutes (cont’d)Recording Statutes (cont’d)

Massachusetts' recording statute is a race-notice Massachusetts' recording statute is a race-notice statute and is based on title theory.statute and is based on title theory.

The statute (M.G.L. Chapter 183, Section 4)The statute (M.G.L. Chapter 183, Section 4) provides that a conveyance is not valid against provides that a conveyance is not valid against any person except the grantor, his heirs and any person except the grantor, his heirs and devisees and persons having actual knowledge of devisees and persons having actual knowledge of the transfer, unless it is recorded in the Registry the transfer, unless it is recorded in the Registry of Deeds in the County in which the land to which of Deeds in the County in which the land to which it relates is located. it relates is located.

RecordingRecording

Two categories of land records:Two categories of land records:

1.1. Recorded LandRecorded Land

2.2. Registered LandRegistered Land

Recorded Land SystemRecorded Land System

The traditional common law system of land records. The traditional common law system of land records.

Each document filed is entered in order of receipt, Each document filed is entered in order of receipt, and referenced by its sequential book and page and referenced by its sequential book and page number of recording.number of recording.

In the Recorded Land system, a deed is evidence of In the Recorded Land system, a deed is evidence of the transferee’s title.the transferee’s title.

The vast majority of land in Massachusetts (about The vast majority of land in Massachusetts (about 94%) is recorded land.94%) is recorded land.

Torrens (Registered Land) SystemTorrens (Registered Land) System

A method of registering land developed in Australia by A method of registering land developed in Australia by Robert Torrens in 1858.Robert Torrens in 1858.

Upon petition, the Land Court conducts a thorough Upon petition, the Land Court conducts a thorough search of title called an action to quiet title – the search of title called an action to quiet title – the objective is to establish ownership.objective is to establish ownership.

A Certificate of Title is issued as of a certain date – A Certificate of Title is issued as of a certain date – future title searches only have to go back to this date.future title searches only have to go back to this date.

When property is transferred, the previous certificate When property is transferred, the previous certificate is canceled and a new certificate is issued to the is canceled and a new certificate is issued to the transferee – the certificate (not the deed) is evidence transferee – the certificate (not the deed) is evidence of the transferee’s title.of the transferee’s title.

Only about 6% of land in Massachusetts is registered Only about 6% of land in Massachusetts is registered land.land.

QuizQuiz

True/FalseTrue/False

1.1. If personal property is to be sold with the real If personal property is to be sold with the real property, it should be included in the deed.property, it should be included in the deed.

2.2. The granting clause includes the legal description The granting clause includes the legal description of the property.of the property.

3.3. The reddendum clause describes the type of The reddendum clause describes the type of estate being conveyed.estate being conveyed.

4.4. As long as a deed remains in the possession of the As long as a deed remains in the possession of the grantor, there is a rebuttable presumption that the grantor, there is a rebuttable presumption that the transfer of ownership has not taken place.transfer of ownership has not taken place.

5.5. To determine title to property by the Torrens To determine title to property by the Torrens system, a lawsuit must be brought.system, a lawsuit must be brought.

FF

TT

TT

TT

FF

Quiz (cont’d)Quiz (cont’d)

6.6. A bargain and sale deed does not transfer interest A bargain and sale deed does not transfer interest in land.in land.

7.7. A corrective deed relates back to the date of the A corrective deed relates back to the date of the original deed.original deed.

8.8. Generally, if the contract for sale and purchase Generally, if the contract for sale and purchase does not specify otherwise, a general warranty does not specify otherwise, a general warranty deed is used.deed is used.

9.9. Constructive notice refers to direct knowledge a Constructive notice refers to direct knowledge a person has about the ownership and condition of person has about the ownership and condition of title to real property.title to real property.

10.10. The most common form of notice statute is the The most common form of notice statute is the race-notice statute.race-notice statute.

TT

FF

TT

TT

TT