Titles - Transfer by deed

Learning Outcomes

After reading this article, you will be able to explain the requirements for transferring title to real property by deed, including the formalities of execution, the rules of delivery and acceptance, and the effect of recording. You will be able to distinguish valid from invalid transfers, identify key exam issues, and apply these principles to MBE-style questions.

MBE Syllabus

For the MBE, you are required to understand the legal requirements for transferring title to real property by deed. This includes the formalities of execution, the rules of delivery and acceptance, and the consequences of recording or failing to record. You should be able to:

• Identify the essential elements of a valid deed.
• Explain the requirements for delivery and acceptance of a deed.
• Distinguish between valid and invalid transfers of title.
• Analyze the effect of recording statutes on title.
• Recognize the consequences of defective deeds and conditional deliveries.

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 is NOT required for a valid transfer of title by deed?
   1. The deed must be in writing.
   2. The deed must be signed by the grantor.
   3. The deed must be delivered to and accepted by the grantee.
   4. The deed must be recorded.
2. If a grantor hands a signed deed to the grantee but tells the grantee, "Do not record or use this deed until after my death," what is the likely result?
   1. Title passes immediately.
   2. Title passes only after the grantor's death.
   3. No delivery has occurred, so title does not pass.
   4. The deed is void for lack of consideration.
3. Which of the following best describes the effect of recording a deed?
   1. It is required for the deed to be valid between grantor and grantee.
   2. It gives constructive notice to subsequent purchasers.
   3. It cures all defects in the deed.
   4. It is required for the deed to be valid if the grantee is a minor.

Introduction

A deed is the primary instrument for transferring legal title to real property. For a transfer by deed to be effective, certain formalities must be satisfied. These include proper execution, delivery, and acceptance. Recording the deed is not required for validity between the parties, but it is essential for protecting the grantee's interest against third parties. Understanding these requirements is essential for MBE success.

Formal Requirements for a Valid Deed

A valid deed must satisfy several formalities:

• The deed must be in writing.
• The deed must identify the grantor and grantee.
• The deed must adequately describe the property.
• The deed must contain words of present transfer.
• The deed must be signed by the grantor.

Key Term: Deed
A written instrument that transfers legal title to real property from one party (the grantor) to another (the grantee).

Delivery of the Deed

Delivery is the act by which the grantor demonstrates an intention that the deed have present legal effect. Delivery can be accomplished by physically handing the deed to the grantee, but physical transfer is not required if the grantor's intent is otherwise clear. Delivery is a question of intent, not mechanics.

Key Term: Delivery (of Deed)
The grantor's act or intent to make the deed immediately effective to transfer title, regardless of physical transfer.

Acceptance of the Deed

Acceptance by the grantee is required for the transfer to be effective. Acceptance is usually presumed if the transfer is beneficial to the grantee, unless the grantee expressly rejects the deed.

Key Term: Acceptance (of Deed)
The grantee's agreement to receive the deed and take title, usually presumed unless expressly refused.

Recording the Deed

Recording is not required for a deed to be valid between the grantor and grantee. However, recording protects the grantee's interest against subsequent purchasers or creditors. Recording gives constructive notice to the world of the grantee's claim to title.

Key Term: Recording (of Deed)
The act of filing a deed in the public land records to provide notice of the transfer to third parties.

Defective Deeds and Conditional Delivery

A deed that is not properly executed, delivered, or accepted is void and does not transfer title. If a deed is delivered to a third party (escrow agent) with instructions to deliver it to the grantee upon the occurrence of a condition, title passes only when the condition is met and the deed is delivered as instructed.

Key Term: Escrow
A deed delivered to a neutral third party with instructions to deliver it to the grantee upon satisfaction of a specified condition.

Worked Example 1.1

Grantor signs and hands a deed to Grantee, saying, "Hold onto this, but don't record it until after I die." Grantee takes the deed and puts it in a drawer. Grantor dies. Is title transferred to Grantee?

Answer: No. Although the deed was physically delivered, the grantor's intent was not to make the deed immediately effective. The instruction to "hold onto this" until after death shows the grantor intended the deed to be operative only at death, making it testamentary and invalid as a deed.

Worked Example 1.2

Grantor executes a deed and gives it to an escrow agent, instructing the agent to deliver the deed to Grantee when Grantee pays the purchase price. Grantee pays the price, and the agent delivers the deed. Has title passed to Grantee?

Answer: Yes. Delivery to a third party (escrow) with instructions to deliver upon a condition is valid. Title passes to Grantee when the condition (payment) is met and the deed is delivered as instructed.

Exam Warning

Many students mistakenly believe that recording is required for a deed to be valid. In fact, recording is not necessary for validity between grantor and grantee, but it is essential for protecting against later claims by third parties.

Revision Tip

Always check for the grantor's intent when analyzing delivery. Physical transfer alone does not guarantee delivery if the grantor did not intend the deed to be immediately effective.

Key Point Checklist

This article has covered the following key knowledge points:

• A deed must be in writing, identify the parties, describe the property, contain words of present transfer, and be signed by the grantor.
• Delivery requires the grantor's intent to make the deed immediately effective; physical transfer is not required.
• Acceptance by the grantee is presumed unless expressly refused.
• Recording is not required for validity between the parties but protects the grantee against third parties.
• Defective execution, lack of delivery, or lack of acceptance renders a deed void.
• Conditional delivery to escrow is valid; title passes when the condition is met and the deed is delivered as instructed.

Key Terms and Concepts

• Deed
• Delivery (of Deed)
• Acceptance (of Deed)
• Recording (of Deed)
• Escrow