Blog

Transferring & Recording Title: Real Estate Concepts

The transfer and registration of titles (Transferring & Recording Titles) is a crucial and often complex issue. Understanding key concepts and terms is essential for those involved in real estate transactions. In this article, we will explore the essential aspects of title transfer and registration, using the original English nomenclature used in the field of real estate.

Legal vs. Equitable Title (Legal Title vs. Equitable Title)

The concept of “title” in the context of real estate can be divided into two distinct categories: legal title and equitable title.

  • Legal Title: This term refers to the full and legal ownership of a property. The legal title holder enjoys the full package of rights associated with the property, including the right to sell, lease, improve, and bequeath the property to others.Owner enjoys full bundle of rights
  • Equitable Title: Equitable title refers to the ability of a party to obtain legal title to a property, subject to agreements with creditors or other interested parties. This party has a legitimate interest in the property, even if it does not hold full legal title.  Party can obtain legal title subject to agreements with creditors

Notice

Notice is essential in real estate transactions and refers to how ownership is evidenced to the general public.

• how ownership is evidenced to the public

There are two main types of notice:

  • Actual Notice: This type of notice refers to the direct knowledge that a person acquires through demonstrable evidence. For example, when filing or inspecting a deed or visiting property in the possession of another party. Knowledge acquired directly through demonstrable evidence, eg, presenting or inspecting a deed, visiting a party in possession
  • Constructive notice: Constructive notice refers to knowledge that a person could have obtained, as presumed by law. This is achieved by recording documents in public records, which is considered information accessible to all. Knowledge one could have obtained, as presumed by law; taught by recording in public records “for all to see”

Voluntary Transfer vs. Involuntary Transfer of Title

The transfer of titles can be carried out voluntarily or involuntarily, and there are several methods to achieve this:

  • Voluntary Transfer: In a voluntary transfer, property is transferred from one party to another on a consensual basis. Common methods include transfer through deeds, wills, and public grants. (Deed, will, public grant)
  • Involuntary Transfer: In an involuntary transfer, property changes hands without the explicit consent of the owner. This can occur in situations of inheritance, loss of property due to non-payment of a mortgage loan, acquisition of property for public utility or even through adverse possession. Descent (without will, with heirs), escheat (without will nor heirs), foreclosure (loan default), eminent domain (public good), adverse possession (hostile, open use).

Voluntary Transfer:

Deeds of Conveyance (Transmission Deeds)

Transfer deeds are fundamental documents in real estate transactions. Here are some of its key features:

  • Key Features:
    • The grantor (grantor) grants a deed to the recipient (grantee). Grantor grants deed to grantee
    • The transfer of legal title occurs through intentional delivery of the deed and acceptance by the recipient. Legal title transfers upon intentional delivery and grantee's acceptance
  • Deed Validity Requirements:
    1. Grantor (The grantor).
    2. Grantee (The receiver).
    3. In writing (Must be in writing).
    4. Legal description (Must include a legal description of the property).
    5. Granting clause (Must contain a granting clause).
    6. Consideration (There must be consideration).
    7. Grantor's signature (Must bear the signature of the grantor).
    8. Acknowledgment (Must be notarized).
    9. Delivery and acceptance (Requires delivery and acceptance).
  • Deed Clauses:
    • Premises (granting): Describes the property and its location.
    • Habendum (type of estate): Specifies the type of right or interest transferred.
    • Reddendum (restrictions): Imposes restrictions or conditions.
    • Tenendum (other property included): You can specify other property included in the transaction.
  • Deed Types:
    • Bargain and Sale: “I own but won't defend.”
    • General Warranty: “I own and will defend.”
    • Special Warranty: “I own and warrant myself only.”
    • Quitclaim: “I may or may not own, and won't defend” – “I may or may not possess and I will not defend.”
    • Special purpose deeds: used for different purposes, interests conveyed, or by different parties.

Transfer Tax

He Documentary stamp tax (documentary stamp tax) is a tax on the transfer of real estate based on the price of the property transferred. This tax is evident in the deed and facilitates the evaluation ad valorem of the property. Your payment is recorded in the deed and is an important consideration in real estate transactions.

  • Documentary stamp tax: tax on conveyance of real property based on price of property conveyed
  • Facilitates ad valorem assessment
  • Payment evidenced on deed

Wills (Wills)

Wills are legal instruments used to transfer property to heirs after the owner's death. Here are some key points:

  • Key Features:
    • The will transfers property to heirs after death (will transfer estate to heirs upon death)
    • The one who creates the will is called the maker, devisor or testator (maker = owner; devisor or testator)
    • The beneficiaries are known as the beneficiaries or heirs (heir = beneficiary or devisee)
  • Types of Wills:
    • Witnessed: Written and signed by the testator in the presence of two witnesses. (Witnessed: in writing and two witnesses)
    • Holographic: Handwritten by the testator. (Holographic: will in testator's handwriting)
    • Nuncupative: Oral testimony written by witnesses; generally not valid for transfer of ownership. Nuncupative: oral will written by witnesses; generally not valid for property transfer
  • Validity of the Will:
    • The testator must be of legal age, mentally competent, and the document must be titled “last will and testament.” (Legal age; mentally competent; entitled “last will & testament”)
    • It must be signed, witnessed and voluntary. (Signed, witnessed, voluntary)

Tested vs. Intestate (Testate vs. Intestate)

The way a person dies, whether with a valid will (testate) or without one (intestate), has a significant impact on the order of title transfer (Order of Title Transfer):

  • Dies Testate with Heirs:
    • First to creditors.
    • Then to homestead.
    • Then to the heirs according to the will (then to hear by will).
  • Intestate Death with Heirs (Dies Intestate with Heirs):
    • First to creditors.
    • Then to homestead.
    • Then to the heirs according to the laws of descent (then to heirs by laws of descent).
  • Intestate Death without Heirs (Dies Intestate, No Heirs):
    • First to creditors.
    • Then to state by escheat.

Involuntary Title Transfer

Adverse Possession

Adverse possession, also known as “unwanted ownership,” allows a person to claim ownership of a property (“unwanted owner” may claim ownership to a property).

Some of the requirements Keys to successful adverse possession include:

  • Must show “claim of right” as reason
  • Possess the property in a conspicuous manner (without hiding it). Must be notorious possession (unconcealed)
  • Maintain hostile possession (claiming to be the owner). Must be hostile (possessor claims ownership)
  • Maintain possession continuously for a period of time established by law. Must be continuous for a statutory period of time

Title Records

Title records play a critical role in determining ownership and transferring title. Here are some key concepts:

  • Characteristics:
    • Instruments affecting title must be registered (Instruments affecting title must be recorded)
    • They provide public notice of the property and its title status (Gives public notice of ownership, condition of title)
    • They determine the marketing of the property and protect the holders of liens (Determines property marketability)
    • Protects lienholders; establishes chronology for lien priority
  • Key Terms:
    • Chain of Title: The succession of owners of property from the original grantor to the present. (Successive property owners from original grant to present)
    • Cloud on Title: Unrecorded claims affecting title. (Unrecorded claims)
    • Suit to Quiet Title: A lawsuit to resolve property claims (lawsuit to settle claims).
    • Abstract of Title: A written chronology of recorded owners, transfers, encumbrances.

Forms of Title Evidence

In real estate transactions, it is essential to have solid evidence of the property and its title. Here are some forms of evidence of title:

  • Title Insurance: Considered the best form of evidence of title.
  • Attorney's Opinion of Abstract: An attorney's legal opinion on title status based on a summary.
  • Title Certificates: Documents issued by government agencies that certify ownership of property.
  • Torrens Registration: A title registration system used in some states to ensure clear ownership.

The transfer and registration of titles is a fundamental process in real estate and affects buyers, sellers, lenders and others involved. Understanding these concepts in their original English form is essential to successfully navigate the world of real estate in the United States.

Legal and Tax Disclaimer

Please be advised that the content presented in this blog is for informational purposes only and should not be construed as legal or tax advice. The articles and information provided here are written from the perspective of a real estate agent affiliated with Keller Williams, and do not represent legal or tax counsel.

As the author, I am a licensed real estate professional under Keller Williams, holding Brokerage DRE License Number: #02197031. However, it is important to note that my expertise is in the field of real estate, and not in legal or tax matters. The insights and opinions shared on this blog are based on my experiences and knowledge in the real estate industry and should be treated as general guidance rather than definitive legal or tax advice.

For specific legal or tax concerns relating to any real estate transactions or investments, readers are strongly encouraged to consult with a qualified attorney or tax advisor who can provide tailored advice based on your individual circumstances and the latest legal and regulatory requirements.

The information on this blog is provided "as is" without warranty of any kind, and I, along with Keller Williams and its affiliates, disclaim all liability for any loss, damage, or misunderstanding arising from reliance on the information contained herein.

Related news

Leave a Comment

Your email address will not be published. Required fields are marked *

Get your FREE guide

Enter your email so we can send you your guide

Secure your space in our webinar.

Don't worry if you can't attend: we'll send you the recording!