Deeds are dangerous for do-it-yourselfers. They don’t look complicated, and really they aren’t. However, there are some basic things to bear in mind.
The person making the deed (e.g., a home seller) is called the grantor. The person receiving the deed (e.g., a home buyer) is called the grantee. Somewhere in the past there’s an original grantor for every property deed. Likely candidates for the United States are European Kings, who acquired the property in the first place by treaties with the natives, or what in the old days we called conquest.
A chain of deeds to a particular property begins with a property deed from the original owner, as the first grantor, to the original grantee, as the second owner. Think of that first deed as the first link in a chain. The second link is the deed from the original grantee, acting as the second grantor, to the second grantee, as the third owner. The third link is the deed from the second grantee, acting as the third grantor, to the third grantee, as the fourth owner, and so on. In an unbroken chain, the last grantee owns the property. Ownership and ‘title’ are basically the same thing, so the last grantee in an unbroken ‘chain of title’ owns the property and has ‘good title’ to it or a good title deed.
If someone has a defective title deed, there is something wrong somewhere in the chain. So, a fundamental rule is that a grantor’s name should exactly match the grantee’s name on the immediately preceding deed, and vice versa (the grantee’s name should exactly match the grantor’s name on the immediately following deed). A practical reason underlies the rule. Deeds are indexed by grantor’s and grantee’s names. A ‘title examiner’ following a chain of title backwards goes from one link to another by looking up the grantor’s name in the grantee index to find the next older deed, in which the grantor will be the grantee, and so on. The examiner could also go forward, looking up a grantee’s name in the grantor index to find the next newer deed.) A deed in which the grantor or grantee’s name is misspelled or otherwise erroneous will not lead backwards (if the grantor’s name is wrong) or forwards (if the grantee’s name is wrong). Such a deed is called a ‘wild card’ deed.
A typical wild card deed is a deed to the current owner, whose name in his deed (as the grantee) is misspelled or otherwise erroneous. If he wants to sell the property, he has to put his true name as the grantor on his deed to the buyer, but such a deed would start a new chain. In other words, there would be no chain backwards from the seller’s deed to the buyer to prove the buyer’s ownership. If the seller’s grantor is dead or can’t be found, a new deed cannot be made and recorded to solve the problem. In that case, the seller has to solve it with lawsuit to ‘quiet title.’ The complaint names as defendants all known and unknown people who assert claims to the property. The unknown people are served by publication in a newspaper. If no defendant answers claiming an interest adverse to the seller, the judge makes an order confirming ownership of the property by the seller, who then has ‘good title deed.’ The recorded order does the same work as a corrected deed would have done
Another fundamental rule is that the property description has to match from one deed to the next. This rule is more flexible. For example, deed A might describe the property by a written description of a surveyor’s map, called a ‘legal description,’ while the immediately following deed B describes the property by its assessor’s parcel number. If the assessor’s corresponding parcel map matches the survey, no problem. A street address will also do. However, a ‘legal description’ is customary and expected by title insurance companies, so it should be used. Never retype a legal description if the one on the current deed can be photocopied clearly enough to satisfy the clerk in the recorder’s office. Retyping a long legal description is an invitation to error.
The most common deed defect, at least in the experience of this writer, appears in deeds transferring property held in a trust. Legally a trust cannot own property in its own name. Trust property is instead owned in the name of the trustee of the trust. In a deed transferring property to a trust, the grantor (called the ‘trustor’ or ‘settlor’) is the owner; the grantee is the owner, as trustee of the trust; and the signer is the owner (e.g., in a typical family trust, Mom and Dad Smith, as grantors; to Mom and Dad Smith, as Trustees of the Smith Family Trust, as grantees; signed by Mom and Dad Smith). In a deed from the trust the grantor would be Mom and Dad Smith, as Trustees of the Smith Family Trust; the grantee would (perhaps) be Smith Child; and the signers would be Mom and Dad Smith, as Trustees of the Smith Family Trust. In the deed to the trust, failing to identify Mom and Dad Smith, where they are named as grantees, as Trustees of the Smith Family Trust, will result in a transfer of the property from Mom and Dad Smith to themselves, not to the trust. No good. In a deed from the Trust, failing to identify Mom and Dad as Trustees of the Smith Family Trust will result in no transfer of the Property to anyone, much less Smith Child. Do-it-yourselfers screw this up frequently. Lawyers not familiar with real estate law screw this up once in while. If you want to do your own deeds to and from your trust, read this paragraph again!
Next time we’ll talk about deeds of trust.