CHAPTER 9 SNAPSHOT REVIEW
Title, Deeds and Ownership Restrictions
Snapshot Review
CONCEPT OF TITLE
Ownership in a bundle of rights
● defined as the legal privileges given to a buyer upon purchase
● includes possession, quiet enjoyment, control, exclusion, disposition
Legal and equitable title
● legal title: ownership of the bundle of rights
●equitable title: a conditional right to legal title subject to an owner’s agreements with buyers and creditors
Transferring title
● voluntary by grant, deed, or will
●involuntary by descent, escheat, eminent domain, foreclosure, adverse possession, estoppel
TRANSFER BY VOLUNTARY ALIENATION
Deeds
● instrument of voluntary conveyance by grantor to grantee
●legal title transfers upon competent grantor’s intentional delivery and grantee’s acceptance
●in Florida: locate current deed; prepare new deed; grantor, spouse, witnesses, notary signatures; file with county clerk
Wills
● last will and testament: voluntary transfer to heirs after death
●maker: devisor or testator; heir: devisee; estate: devise
● types: witnessed; holographic; approved; nuncupative
● validity: adult; competent; indicates “last will and testament”; signed; witnessed; voluntary
● probate: if testate, estate passes to heirs; if intestate, to successors by descent; if intestate with no heirs, estate escheats to state
●testate probate process: validate will; validate, settle claims and pay taxes; transfer balance of estate to heirs
TRANSFER BY INVOLUNTARY ALIENATION
Laws of descent
● state statutes determine heirs and shares
Escheat
● title transfers to state
Foreclosure
● title lost by forfeiture
Eminent domain
● title lost to public for the greater good
Adverse possession
● title taken by claim of right or color of title; continuous, notorious, hostile possession; must pay taxes
Estoppel
● barred by prior acts or claims
NOTICE OF TITLE
● how ownership is evidenced to the public
Actual notice
● actual notice: knowledge acquired or imparted directly through demonstrable evidence, e.g., presenting or inspecting a deed, visiting a party in possession
Constructive notice
● constructive notice: knowledge one could or should have obtained, as presumed by law; imparted by recording in public records “for all to see”
PROTECTION OF TITLE
Title records
● all instruments affecting title must be recorded
●give public notice; protect owners; protect lienholders’ claims
Title evidence
● needed to prove marketable title as well as who owns
●forms of evidence: title insurance; attorney’s opinion of abstract; title certificates
Title companies
● performs title search to determine title legitimacy
● may require property survey; prepares abstract of title and title opinion letter
● may maintain escrow account, handle transaction closing, and file new title; may issue title insurance
Chain of title
● successive property owners from original grant to present owner
●abstract of title: chronology of recorded owners, transfers, encumbrances
Title abstract
● written chronological summary of title records; contains chain of title, documents that might cloud title
Title opinion
● written by an attorney; opinion of marketability of title
Title insurance
● best evidence of marketable title
● owner’s policy – covers property’s appreciated value against title defects; standard or extended coverage; not transferrable
● lender’s policy – covers financed mortgage loan balance against title defects; is transferrable if loan is sold to another lender
DEEDS
Deed essentials
● parties: grantor, grantee
● components: parties, consideration, granting clause, habendum clause, restrictions, inclusions, exceptions, reservations, appurtenances, description, delivery and acceptance, signatures, witnesses
● Florida validity requirements: in writing, signed by transferor, two witnesses, space for parcel ID number
●recording required in Florida; include grantor’s info and signature; grantee’s info; natural person who prepared the deed; witnesses; notarized; designated space for clerk’s use
Types of statutory deed
● bargain and sale: “I own but won’t defend”
●general warranty: “I own and will defend”
●special warranty: “I own and warrant myself only”
●quitclaim: “I may or may not own, and won’t defend”
Special purpose deeds
● used for different purposes, to convey certain interests, or by certain parties
●life estate deed to divide ownership between current grantor and future owners
Deed clauses
● premises clause: granting
●habendum clause: type of estate
●reddendum clause: restrictions
●tenendum clause: other property included
●warrants: seizen; quiet enjoyment; further assurance; forever; encumbrances; grantor’s acts
GOV’T OWNERSHIP LIMITATIONS/RESTRICTIONS
Police powers
● government’s right to regulate use of property and to take possession of property; limits owners’ rights
Eminent domain
● power to take private property for public use; must compensate owner
Taxation
● no Florida state income tax; taxed on net profits from rental property income and sales tax from short-term rentals; capital gains tax on profit from sale of property; annual property tax based on value of property
PRIVATE OWNERSHIP LIMITATIONS/RESTRICTIONS
Encumbrances
● non-possessory interests limiting the legal owner’s rights; easements, encroachments, licenses, deed restrictions, liens, deed conditions
Deed restrictions
● conditions and covenants imposed on a property by deed or subdivision plat
Easements
● a right to use portions of another’s property
● easement appurtenant: dominant tenement’s right to use or restrict adjacent servient tenement; attaches to the real estate
●easement by necessity: granted by necessity, e.g. to landlocked owners
●party wall: negative easement in a shared structure
● easement in gross: a right to use property that does not attach to the real estate
●personal easement in gross: not revocable or transferrable; ends upon death of easement holder
●commercial easement in gross: granted to businesses; transferrable
● easement creation by voluntary grant, court decree by necessity or prescription, eminent domain
●easement creation by prescription: obtainable through continuous, open, adverse use over a period
● easement termination: release; merger; abandonment; condemnation; change of purpose; destruction; non-use
Encroachments
● intrusions of real estate into adjoining property; can become easements
Licenses
● personal rights to use a property; do not attach; non-transferrable; revocable
Leases
● instrument of leasehold conveyance; contract of covenants and obligations
●landlord grants temporary, exclusive use in trade for rent and reversion
● lease type based on expense responsibility; how rent is paid; property type; rights leased
● gross lease: landlord pays expenses; tenant pays more rent
● net lease: tenant pays some or all expenses; rent is less
● percentage lease: landlord receives rent minimum plus percentage of retailer’s sales
●variable/index lease: tenant pays specified rent with increases on set dates
● residential lease: gross lease hybrid; short term; uniform terms reflect landlord-tenant standards
● commercial lease: longer term; entails tenant improvements; complex, negotiable lease terms
● ground lease: landlord owns and leases ground but does not own improvements
● proprietary lease: for cooperative unit owners; indefinite term; assigned to new unit owner on sale
● leasing of rights: leasehold transfer of rights for limited use; examples: air, mineral, water rights
● sale subject to lease: property is sold with requirement to maintain current tenant lease
●subletting and assignment: transfer of a portion of leasehold to another (subletting); transfer of entire leasehold (assignment)
Liens
● claims attaching to real and personal property as security for debt
● lien types: voluntary and involuntary; general and specific; superior and junior
● lien priority: rank ordering of claims established by lien classification and date of recording; determines who gets paid first if lienee defaults
● superior liens: rank over junior liens; not ranked by recording date; real estate tax and assessment liens and inheritance taxes
● junior liens: rank by recording date: judgment; mortgage, vendor’s, utility, mechanic’s, other tax liens; mechanic’s lien priority “dates back” to when work began
