Titles - In general

Learning Outcomes

This article examines the core principles governing title to real property, focusing on the standards for marketable title, the doctrine of adverse possession, and the requirements for valid deed execution and delivery. After reading this article, you will understand how title quality is assessed, how ownership can be acquired through possession over time, and the legal formalities necessary to transfer property interests via deed, enabling you to analyze these issues in MBE fact patterns.

MBE Syllabus

For the MBE, you are required to understand the concepts related to proving and transferring title to real property. This includes the implied covenant of marketable title in land sale contracts, the elements required to obtain title through adverse possession, and the formalities for executing and delivering deeds. You should be prepared to:

• Analyze whether title is "marketable" based on potential defects like encumbrances or chain of title issues.
• Apply the elements of adverse possession: actual, exclusive, open and notorious, hostile, and continuous possession for the statutory period.
• Understand the significance of "color of title" and the concept of tacking in adverse possession.
• Identify the requirements for a valid deed, including execution, description of property, and delivery.
• Distinguish different types of deeds (general warranty, special warranty, quitclaim) and the title covenants they contain.
• Recognize the concept of estoppel by deed.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which of the following defects MOST likely renders title unmarketable?
   1. An existing zoning ordinance that permits only residential use.
   2. A recorded utility easement providing electrical service to the property.
   3. A significant encroachment by a neighboring structure onto the property.
   4. A mortgage that the seller intends to satisfy using the proceeds at closing.
2. To acquire title by adverse possession, the possessor's occupation of the land must be:
   1. With the true owner's express permission.
   2. Intermittent, provided the total time meets the statutory period.
   3. Without claim of right or title.
   4. Openly visible and apparent to put a reasonable owner on notice.
3. Which element is NOT essential for a valid deed conveying real property?
   1. The signature of the grantor.
   2. An adequate description of the land.
   3. A statement of the consideration paid.
   4. Words indicating an intent to transfer title.

Introduction

Establishing and transferring title – legal ownership – to real property involves several key concepts frequently tested on the MBE. These include the quality of title promised in land sale contracts (marketable title), the possibility of acquiring title through long-term possession (adverse possession), and the formalities required for transferring title via a deed. Understanding these areas is essential for analyzing property disputes and conveyancing issues.

Marketable Title

Every contract for the sale of land contains an implied covenant that the seller will provide marketable title at closing. This is title reasonably free from doubt, meaning title that a prudent buyer would accept in the exercise of ordinary business judgment. It does not mean perfect title, but it must be free from questions that might subject the buyer to litigation.

Key Term: Marketable Title Title reasonably free from doubt or the threat of litigation, which a prudent, informed buyer would accept.

Defects rendering title unmarketable include:

1. Defects in the Record Chain of Title: Significant variations in property descriptions, improperly executed prior deeds, or evidence that a prior grantor lacked capacity can render title unmarketable.
   • Adverse Possession: Title acquired by adverse possession is generally considered unmarketable unless the adverse possessor has perfected the title through a quiet title action or other legal proceeding.
2. Encumbrances: Mortgages, liens, easements, and restrictive covenants generally render title unmarketable unless waived by the buyer. Zoning ordinances are not considered encumbrances, but an existing violation of a zoning ordinance does render title unmarketable.
   • Mortgages/Liens: Generally, a seller can use the sale proceeds to satisfy existing mortgages or liens at closing, so their presence before closing does not automatically make title unmarketable.
   • Easements: An easement benefiting the property (e.g., utility easement) or one visible or known to the buyer might not render title unmarketable. However, an easement diminishing the property's value (e.g., a neighbor's right-of-way) typically does.
3. Significant Encroachments: An encroachment by a neighboring structure onto the property, or by the property's structure onto neighboring land, usually makes title unmarketable. Minor encroachments might be disregarded.

The buyer must notify the seller of any title defects and allow a reasonable time to cure, even if this extends the closing date. If the seller cannot provide marketable title, the buyer's remedies include rescission, damages, or specific performance with an abatement of the purchase price. Importantly, the covenant of marketable title applies only up to the closing. After closing, the contract merges with the deed, and the buyer's remedies are limited to those arising from any covenants contained in the deed itself.

Adverse Possession

A person can acquire legal title to real property owned by another through adverse possession if their possession meets specific requirements for a statutorily defined period. This doctrine essentially rewards the productive use of land and penalizes owners who "sleep on their rights."

Key Term: Adverse Possession A method of acquiring title to real property by possessing it for a statutory period under certain conditions (actual, exclusive, open & notorious, hostile, continuous).

The elements required are:

1. Actual and Exclusive Possession: The claimant must physically occupy the property. This occupation cannot be shared with the true owner or the public generally. Actual possession gives notice to the owner and delineates the extent of the claim.
   • Constructive Possession: If a claimant enters under color of title (a document purporting to convey title but defective) to a portion of a larger tract described in the document, they may gain title to the entire tract through constructive adverse possession, provided the portion possessed bears a reasonable relation to the whole.
2. Open and Notorious Possession: The possession must be sufficiently apparent to put the true owner on notice that a trespass is occurring. The use cannot be hidden or concealed.
3. Hostile Possession (Claim of Right): The possession must be without the owner's permission. The possessor's state of mind is generally irrelevant (majority view); it does not matter whether they believe they own the land or know they are trespassing. It simply means the possession is inconsistent with the owner's rights.
   • Permissive Start: If possession begins with permission (e.g., tenant, licensee), it does not become hostile until the possessor clearly repudiates the permission.
   • Co-tenants: One co-tenant's possession is not hostile to other co-tenants unless there is an ouster or explicit declaration of sole dominion.
4. Continuous Possession: Possession must be uninterrupted throughout the statutory period (e.g., 10, 15, or 20 years, depending on the jurisdiction). Continuous possession means the degree of occupancy and use an average owner would make of the property type. Seasonal use may suffice for property like a vacation home.
   • Tacking: An adverse possessor can tack their period of possession onto a predecessor's period if there is privity (a non-hostile connection, such as descent, devise, or deed) between them. Ouster or abandonment breaks privity.

Disability: The statute of limitations does not run against a true owner afflicted by a disability (infancy, insanity, imprisonment) at the inception of the adverse possession. Government Land: Generally, government land cannot be acquired by adverse possession.

Worked Example 1.1

Oscar owned Greenacre, a five-acre wooded parcel. In 2000, Penelope, mistakenly believing Greenacre was part of her adjacent property described in her deed, began clearing a one-acre section of Greenacre along their boundary and built a small cabin there. She used the cabin for weekend retreats several times a year. Oscar never visited Greenacre and was unaware of Penelope's presence. The statutory period for adverse possession is 20 years. In 2021, can Penelope claim title to the one-acre section?

Answer: Yes, likely. Penelope's possession was actual (clearing, building cabin), exclusive (not shared with Oscar), open and notorious (clearing and cabin construction are visible), hostile (without Oscar's permission, regardless of her mistaken belief - majority view), and continuous (seasonal use consistent with a weekend retreat cabin for over 20 years). She meets the elements for adverse possession of the one-acre section she actually occupied.

Deeds and Title Covenants

A deed is the legal instrument used to transfer title to real property. To be effective, it must be lawfully executed and delivered.

Key Term: Deed A written instrument used to transfer an interest in real property.

Deed Formalities

1. Writing: Required by the Statute of Frauds.
2. Signed by Grantor: The party transferring the property must sign.
3. Identifies Parties: Must name the grantor and grantee.
4. Describes Property: Must contain an adequate description (need not be a formal legal description, but enough to identify the land).
5. Words of Intent: Must indicate an intent to transfer realty (e.g., "grant," "convey").
6. Delivery: Requires grantor's intent to make the deed presently effective. Physical transfer is not essential; intent can be shown by words or conduct. Delivery to a third party (escrow) is permissible. Acceptance by the grantee is also required but usually presumed if the transfer is beneficial.

Types of Deeds and Title Covenants

Deeds differ based on the promises (covenants for title) the grantor makes regarding the title being transferred.

1. General Warranty Deed: Provides the greatest protection. Contains six traditional covenants:
   • Present Covenants (breached, if ever, at delivery):
     • Seisin: Grantor owns the estate purported to be conveyed.
     • Right to Convey: Grantor has power to make the conveyance.
     • Against Encumbrances: No physical or title encumbrances (mortgages, easements etc.).
   • Future Covenants (breached only upon interference with possession):
     • Quiet Enjoyment: Grantee will not be disturbed by a third party's lawful claim.
     • Warranty: Grantor will defend against reasonable title claims by third parties.
     • Further Assurances: Grantor will perform acts reasonably necessary to perfect title.
2. Special Warranty Deed: Contains the same six covenants but warrants only against defects arising by, through, or under the grantor. The grantor makes no warranties about defects existing before they obtained title.
3. Quitclaim Deed: Contains no covenants for title. It transfers only whatever interest the grantor has, if any.

Worked Example 1.2

Seller conveyed Blueacre to Buyer via a quitclaim deed. Buyer later discovered a properly recorded mortgage on Blueacre granted by a previous owner before Seller acquired the property. Does Buyer have a claim against Seller based on the deed?

Answer: No. A quitclaim deed contains no covenants for title. Seller transferred only whatever interest Seller had, subject to all existing defects and encumbrances. Buyer assumed the risk of title defects.

Estoppel by Deed

If a grantor purports to convey title to property they do not actually own at the time of conveyance, but subsequently acquires title, that title automatically passes to the grantee. This doctrine usually applies only if the conveyance was by warranty deed.

Key Point Checklist

This article has covered the following key knowledge points:

• Marketable title is implied in land sale contracts and means title reasonably free from doubt.
• Encumbrances like mortgages, liens, easements, and significant encroachments typically render title unmarketable.
• Adverse possession requires actual, exclusive, open & notorious, hostile, and continuous possession for the statutory period.
• Possession must be without the owner's permission to be hostile; possessor's state of mind is usually irrelevant.
• Tacking of possession periods is allowed if there is privity between successive adverse possessors.
• A valid deed requires a writing signed by the grantor, identification of parties and property, words of intent, and delivery.
• Delivery requires the grantor's present intent to transfer title; physical transfer is not required.
• Deeds vary by the title covenants provided: general warranty (broadest protection), special warranty (grantor's acts only), and quitclaim (no covenants).
• Present title covenants (seisin, right to convey, against encumbrances) are breached at delivery; future covenants (quiet enjoyment, warranty, further assurances) are breached upon later interference.

Key Terms and Concepts

• Marketable Title
• Adverse Possession
• Deed