Titles - Persons authorized to execute documents

Learning Outcomes

This article examines the legal requirements concerning who is authorized to execute documents transferring title to real property. It covers the capacity required of grantors, signature formalities under the Statute of Frauds, the rules governing execution by agents (including powers of attorney and the Equal Dignities Rule), and the specific requirements for corporate conveyances. After studying this material, you will be able to identify authorized parties and valid execution methods, essential for analyzing title issues in MBE questions.

MBE Syllabus

For the MBE, you are required to understand the essential elements for a valid transfer of title by deed, including the authority of the person executing the document. This includes:

• Identifying the requirements for a valid deed, including execution formalities.
• Assessing the capacity of a grantor (e.g., minors, incompetents).
• Analyzing the validity of a signature under the Statute of Frauds.
• Understanding the requirements for execution by an agent, including Power of Attorney and the Equal Dignities Rule.
• Evaluating the authority required for corporate officers executing deeds.
• Recognizing the consequences of improper execution (e.g., void vs. voidable deeds).

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. Grantor, who is 17 years old but appears much older, executes a deed conveying Blackacre to Grantee, who pays fair market value and has no knowledge of Grantor's age. The deed is:
   1. Void ab initio.
   2. Voidable by Grantor.
   3. Valid and enforceable by Grantee.
   4. Valid only if ratified by Grantor upon reaching majority.
2. Principal orally authorizes Agent to sign a deed conveying Principal's land to Buyer. Agent signs the deed in Principal's name while Principal is out of the country. In most jurisdictions, is the deed validly executed?
   1. Yes, because Agent had actual authority.
   2. Yes, because Principal ratified the act upon return.
   3. No, because Agent's authority was not in writing.
   4. No, because Agent cannot sign Principal's name.
3. A deed transferring corporate property is signed only by the corporation's Treasurer. The corporation's bylaws require deeds to be signed by both the President and the Secretary. The deed is likely:
   1. Valid, because the Treasurer is an officer.
   2. Valid, if the Treasurer had apparent authority.
   3. Invalid, because it lacks the required signatures per the bylaws.
   4. Voidable by the corporation.

Introduction

For a deed to effectively transfer title to real property, it must be properly executed by a person with the legal authority to convey the interest. This involves several key considerations, including the capacity of the grantor, the satisfaction of signature requirements under the Statute of Frauds, and, where applicable, the valid authorization of agents or corporate officers acting on behalf of the property owner. Understanding who is authorized to sign a deed and the formalities required is essential for determining the validity of a conveyance.

Capacity of Grantor

The person conveying the property (the grantor) must have the legal capacity to execute a deed. Lack of capacity generally makes the deed voidable at the option of the grantor (or their representative).

Key Term: Grantor
The person or entity transferring title to real property by deed.

Key Term: Grantee
The person or entity receiving title to real property by deed.

Minors (Infants)

Individuals below the age of majority (typically 18) generally lack the capacity to contract, including the capacity to convey real property. A deed executed by a minor is voidable by the minor grantor before or shortly after reaching the age of majority. The minor can choose to disaffirm the conveyance.

Mental Incapacity

A grantor who lacks the mental capacity to understand the nature and consequences of executing the deed (e.g., due to mental illness or defect) may lack the capacity to make a valid conveyance. Similar to deeds by minors, a deed executed by a mentally incompetent person is generally voidable by the grantor (or their guardian/conservator) if they later regain capacity or by their estate representative upon death. However, if the grantor has been judicially declared incompetent and placed under guardianship, a deed executed by the grantor personally (rather than the guardian) is void.

Signature Requirements (Statute of Frauds)

The Statute of Frauds requires that a deed transferring an interest in real property must be in writing and signed by the party to be charged – the grantor. Without the grantor's signature, the deed is invalid.

Method of Signature

The signature can be the grantor's full name, initials, a mark, or any other symbol intended to authenticate the document. It does not need to be witnessed or notarized for validity between the parties in most states, although acknowledgment before a notary is usually required for recordation.

Key Term: Forgery
The fraudulent making or material alteration of a writing (like a deed signature) with the intent to deceive.

A forged deed (one where the grantor's signature is falsified without authority) is void ab initio. It transfers no interest, even to a subsequent bona fide purchaser for value.

Execution by Agents

A grantor may authorize an agent to execute a deed on their behalf.

Power of Attorney

Authority is typically granted via a written instrument called a Power of Attorney (POA), which specifically authorizes the agent (attorney-in-fact) to act regarding the principal's real property. The POA should generally be recorded along with the deed.

Key Term: Power of Attorney (POA)
A written instrument authorizing an agent (attorney-in-fact) to act on behalf of a principal.

Equal Dignities Rule

Most states follow the Equal Dignities Rule. This rule requires that an agent's authority to execute an instrument that is itself required to be in writing (like a deed under the Statute of Frauds) must also be created in writing. Therefore, oral authorization for an agent to sign a deed is generally insufficient, making the resulting deed invalid or voidable.

Key Term: Equal Dignities Rule
The legal doctrine requiring that an agent’s authority must be in writing if the contract the agent is to enter into on behalf of the principal must be in writing (e.g., contracts subject to the Statute of Frauds, like deeds).

Exception: The Equal Dignities Rule generally does not apply if the agent signs the deed in the principal's presence and at the principal's direction.

Worked Example 1.1

Grantor orally tells Agent, "Go sign the deed selling my house to Buyer." Agent goes to the closing and signs Grantor's name to the deed while Grantor is on vacation. Buyer pays the purchase price. Is the deed validly executed under the Equal Dignities Rule?

Answer: No. Because a deed must be in writing under the Statute of Frauds, the Equal Dignities Rule requires the agent's authority to sign the deed also be in writing (e.g., a Power of Attorney). Oral authorization is insufficient. The deed is likely invalid or voidable. Grantor was not present when Agent signed.

Execution by Corporations

Corporations, being legal entities, execute deeds through authorized individuals.

Corporate Authority

Authority typically stems from:

1. The corporation's bylaws, which often specify which officers (e.g., President, Secretary) are authorized to execute deeds.
2. A resolution by the corporation's Board of Directors specifically authorizing the transaction and empowering certain officers to execute the necessary documents.

Signatures and Seal

Statutes or bylaws usually dictate who must sign (often requiring signatures from two different officers) and whether the corporate seal must be affixed. Failure to comply with these internal authorization requirements can render the deed voidable by the corporation, although third parties (especially BFPs) may sometimes be protected by principles of apparent authority if they reasonably relied on the officer's power to act for the corporation.

Worked Example 1.2

MegaCorp's bylaws state that deeds must be signed by the President and attested by the Secretary. The President, acting alone, signs a deed conveying corporate property to Buyer, who pays fair value and records. MegaCorp's board later claims the conveyance was unauthorized. Is the deed likely valid against MegaCorp?

Answer: Likely invalid or voidable by MegaCorp. The President acting alone lacked the actual authority specified in the bylaws (requiring two officers). While Buyer might argue apparent authority, the lack of the required second signature (especially if the bylaws are public or Buyer should have inquired) makes enforcement against MegaCorp difficult.

Summary

Valid execution of a deed requires the grantor to have legal capacity (being of majority age and mentally competent) and to sign the document as required by the Statute of Frauds. Forged deeds are void. If an agent executes a deed, their authority must generally be in writing under the Equal Dignities Rule (unless signed in the principal's presence). Corporate deeds require execution by officers with proper authority, typically documented in bylaws or a board resolution. Defects in authority or execution may render a deed voidable or, in cases like forgery, void.

Key Point Checklist

This article has covered the following key knowledge points:

• Grantor must have legal capacity (age of majority, mental competence).
• Deeds by minors or incompetents (not adjudicated) are generally voidable.
• Deeds by judicially declared incompetents are void.
• Deed must be signed by the grantor (Statute of Frauds).
• Forged deeds are void, even against BFPs.
• Agents executing deeds generally require written authority (Power of Attorney) under the Equal Dignities Rule.
• Equal Dignities Rule does not apply if agent signs in principal's presence.
• Corporate deeds require execution by individuals with proper corporate authority (usually officers specified in bylaws or board resolutions).
• Lack of proper corporate authorization may make a deed voidable.

Key Terms and Concepts

• Grantor
• Grantee
• Forgery
• Power of Attorney (POA)
• Equal Dignities Rule