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Deciphering Deeds

Deciphering Deeds

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Deeds and titles may seem confusing or somewhat boring at first glance. Finding the key words and phrases in a sea of text is difficult; however, with a little coaching, you can learn how to sniff out the important details. This article provides a basic overview of title terminology and how deeds work, so you can find and understand the key terms in your deed.

A deed is little more than a land contract which is recorded at the county or city courthouse. Deeds are recorded because land is often owned by a party for a long time—longer than people might otherwise remember. Later when it comes time to sell the property, the courthouse holds the previously agreed-upon land description in a safe, convenient, and neutral location. It is easy to imagine that property borders would be disputed in the future if they were not clearly defined.

The Parties (The People on the Deed)

There are two types of parties to a deed: the grantor gives the property and the grantee receives it. You will notice this naming convention in many areas of law—the title of the person initiating the promise ends in ‘or’ and the one receiving it ends in ‘ee.’ There can be more than one grantor and grantee (as when one married couple sells a home to another). A deed for a property you currently own will list you as a grantee. The names of the grantors and grantees are often underlined or listed in bold text and the document’s footer often lists the parties as well.

Tracking Transfers of Deeds

To keep track of all the owners over time, the courthouse stamps a number on each deed page. In the old days, this was coded as DB/PN for ‘deed book/page number’ and before that the Latin terms ‘liber’ and ‘folio.’ In current times, the courthouse typically just stamps an ‘instrument number’ on the deed because documents are now stored electronically and are no longer kept in giant paper portfolios. These records are all indexed by name, address, and instrument number and can be easily searched at any courthouse—the information on deeds is public record.

In Virginia, a probated will acts as a deed. Sometimes the prior deed can’t be found because it was actually a will or intestate estate. We have seen cases where the land has passed through estates for a hundred years since the last recorded deed.

Title Types

The phrase ‘to hold title’ sounds both regal and ancient. It means a person owns a parcel of real estate as entered in a county’s land records.

The most basic title is ‘sole ownership,’ in which one party owns a parcel of real estate alone. A person, trust, or corporation can all solely own a parcel, even if there is more than one trustee or corporate officer.

Joint ownership can get more complicated. In Virginia, two or more people who hold property together are deemed to be ‘tenants in common’ unless the deed says otherwise. As tenants in common, each party owns an undivided interest in the property, but at their death their share passes to their heirs/beneficiaries. By contrast, joint tenants with rights of survivorship (JTROS) each own equal undivided shares, but their share passes to the other owner(s) upon death. Typically, married or long-time committed couples own land as JTROS, and everyone else owns land as tenants in common.

A special type of JTROS applicable only for married couples is ‘tenants by the entireties.’ This works the same as JTROS and insulates the interest of one spouse from the creditors of the other spouse. This type of ownership does not exist in every state but is common in the region where JGB practices. The protection afforded by tenancy by the entireties continues once a parcel is transferred by a couple to their trust(s) for estate planning purposes.

There are many other complicated title variants like life estates and reverters that are beyond the scope of this newsletter. (There is a reason there are many specialists in real estate law beyond simple real estate closings!)

Warranties

A deed may include a warranty. A warranty is a promise by the prior owner (and every previous owner who gave a warranty) that the title is clear and that they will stand with you to defend the title if it is challenged. A warranty is not required as part of the ‘marketable title’ that a seller must provide, but it is preferred.

Quit Claim

By contrast, a ‘quit claim’ deed provides no warranty. A seller in a quit claim deed transfers any interest he or she may have in the property, including none. For example, I could grant you a quit claim deed for my interest in the Eiffel Tower, and you would receive the entirety of my interest—which I’m sad to say is zero (or as they say in Paris, ‘zéro.’) We sometimes see quit claim deeds used in mortgage refinancing where a title company wants to take land out of a trust for a refinance and, rather than keep the warranty intact, they “quitclaim” the property out of the trust and back in after the refinance, nullifying the warranty in the process. Once you break a warranty, the prior owners are off the hook—you cannot reconnect the chain of title. Quit claim deeds are legal and effective, but warranty deeds are better if you can get them. (There is no such thing as a ‘quick claim’ deed—it’s just a mispronunciation of quit claim deed.)

General Warranty

Warranty deeds come in different varieties as well. The classic is the General Warranty Deed which provides the ‘Six English Covenants of Title.’ First-year law students learn and quickly forget all six, but they are the following:

  • Covenant of Seisin: a promise that the seller properly owns the land,
  • Covenant of the right to convey: a promise that the seller has authority to sell the land,
  • Covenant against encumbrances: a promise that no one else has a lien on the property,
  • Covenant for quiet enjoyment: a promise that the buyer will not have another person make a claim against their title,
  • Covenant of general warranty, and
  • Covenant for further assurances: both promise the seller will assist in defending the property against title claims now and in the future.

Special Warranty

Deeds that provide a special warranty provide some, but not all, of the six English Covenants of Title to the buyer. Typically, a special warranty deed promises that the property title was clear when the seller owned it, but they make no promises before that.

Property Description

Your deed identifies the property by its formal legal description and tax map number. It is usually not identified by your address, which is counterintuitive to the average citizen. It typically reads along the lines of “Lot 7, Block 4 of a subdivision known as PSEUDONYM ACRES recorded in Plat number 123/456.” Old farms and other old parcels have a ‘metes and bounds’ description which lists the path a surveyor walked at one point. They read like this:

“Beginning at an iron stob at the corner of John Doe’s and Mable Smith’s farms, thence north 332.5 degrees, 137 feet to a large Hickory…”

An owner can resurvey the property to get a modern legal description but need not do so, as long as the buyer is satisfied with the title description and the owner is willing to support whatever warranty they provide in the deed.

In practice, title insurance companies play a strong role in defining and defending titles. A title insurer will not insure a parcel that it feels does not have a proper description or title history. This in turn may make a potential buyer wary of completing the transaction. Similarly, while every prior owner in a general warranty deed promises to stand together to defend the title if needed, in practice it is the title insurer of the current owner which typically handles the issue alone.

Conclusion

“Every deed tells a story,” an instructor once told me. Your deed tells who owned the land before you, how much that owner is willing to do to protect your interest and, of course, your deed describes which parcel you own. There are often many mistakes and defects on titles that can be corrected if found. It is a good idea to pull out your deeds and make sure they say what you intended. If a title is held with rights of survivorship, is that what you intended? Should a parcel be in your name or in your trust’s name? It is very easy to correct titles in life but much harder after death. Don’t hesitate to call JGB with questions about your deed and estate plan.

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