Exploring Types of Real Estate Deeds

• A deed is a legal document that transfers ownership of property from one party to another.

Types of Deeds

• General Warranty Deed: The grantor guarantees the property is free from any liens, encumbrances, or claims, regardless of when they arose, including those from a previous owner.
  • It is the most common and most comprehensive type of deed, except for explicitly stated exceptions in the deed.
• Special Warranty Deed: The grantor guarantees that they own and can sell the property and that the property incurred no encumbrances during their ownership.
  • The grantor is responsible only for issues that arose during their ownership, not for any problems that existed before.
  • This type of deed is usually used in commercial real estate and foreclosures.
• Quitclaim Deed: Transfers a person's interest in a property to another party without any guarantees or warranties of ownership, including representing, covenanting, or warranting that the title is good.
  • This type of deed is generally used in non-sale situations, such as correcting title issues or family transfers.

Delivery of Deeds

• "Delivery" involves the physical transfer of the deed and the intent to immediately transfer the title, relinquishing all dominion and control.
• Transfer of property becomes effective only when the deed is delivered to the grantee.
  • An undelivered deed has no legal effect, even if signed by the grantor.
• Delivery requires the grantor to manifest an intention to immediately transfer title to the grantee.
• Delivery can be made by acts, words, or both. "If a grantor delivers a deed but reserves the right to retrieve it, conditioning its operation on their death and continuing to use the property as if no transfer occurred, the grantor's actions are an attempt to use the deed as if it were a will."

Recording Deeds

• Recording Process:
  • The Grantee deposits the deed to the county recording office.
  • The recorder stamps the date and time of the deposit.
  • The copy is then entered into a chronological book of deeds.
  • The recorded deed is then indexed by the names of the grantor and grantee.

Types of Notice

• Actual notice is when information is given directly to a party or personally received by a party, informing them of something that could affect their interests.
• Inquiry notice is when a purchaser has knowledge of facts or circumstances that would lead a reasonable person to believe further investigation is warranted.
• Record provides constructive notice to all third parties of all the various interests affecting the title.

Recording Acts

• Recording acts provide a mechanism for a real property buyer to discover/determine if there was a prior purchase contrary to the buyer's, which checks for a good title.
• Recording acts govern only prior and subsequent purchasers of the same real property.
• They protect only bona fide purchasers, which is defined as "a bona fide purchaser for value without notice."
  • A "BFP" is an innocent party who purchases property without notice of any other party's claim to the title.

Recording Acts Types

• Pure Race: BFP 2 must record before BFP 1. Winning the race equates to winning the title, irrespective of BFP 2's awareness of BFP 1; this rule is observed in a small minority of jurisdictions.
• Pure Notice: BFP 1's unrecorded instrument is invalid against any BFP 2+ without notice, regardless of whether BFP 2+ records before BFP 1.
• Race-Notice: BFP 2 wins only if they lack notice of BFP 1 and records first.

Race Statutes

• Priority of title belongs to the party that records a claim first, even if the party had notice of an earlier unrecorded claim on the same property.

Notice Statutes

• Priority of title belongs to the party with the most recently obtained valid claim, but only if the party also lacked notice of an earlier claim.
  • This differs from the other types of recording acts, whereby being the first to record matters in determining the owner of the property.
• A subsequent purchaser’s claim to the property will be successful provided they had no actual or constructive notice of the prior conveyance.
  • An earlier recorded claim provides constructive notice to all possible purchasers.
• A subsequent purchaser, who purchases for value and without notice of a prior mortgage will prevail against the prior purchaser.

Notice Statutes Example

• Helena purports to sell Lumonacre to Dylan for $100,000, and the next day purports to sell exactly the same piece of land to Irving for another $100,000.
• Irving will own the land so long as he was not aware of the prior sale to Dylan.
• If Dylan records his interest before Irving's purchase, this recordation will be deemed to give Irving constructive notice.
• If Irving purchases the land without notice, and Dylan then records his prior purchase before Irving records his own purchase, then Irving will still prevail in ownership of the land.

Race-Notice Statutes

• Priority of title belongs to the party that records first, but only if the party also lacked notice of prior unrecorded claims on the same property.