A grant deed transfers interest in real property from one party to another. The grant deed is the most commonly used deed in California.
A grant deed is typically used for the sale or transfer of property from one family member to another. In such a scenario, the property will not be re-evaluated for property tax purposes.
A grant deed includes:
the name of the party transferring the property (grantor)
a legal description of the property being transferred
the name of the party that the property is being transferred to (grantee)
For a grant deed to transfer, the grantor must sign and date the deed in the presence of a notary public or other court official. The notary will then collect the grantor’s fingerprint and seal the deed. This indicates that the deed has been signed and executed.
Most property deeds — including a grant deed — contain title covenants that ensure a marketable title and implied warranty between the grantor and grantee.
A marketable title is a clean title that allows a buyer to have full interest in a purchased property. This means that a property is free and clear of any interests (i.e. encumbrances, involuntary liens) that would “cloud” the title and affect the ownership rights of a grantee.
All property taxes must be paid off prior to the sale, or must be disclosed to the buyer as a part of the transaction.
Implied warranty means that a grantor owns a marketable title that can be freely transferred. Furthermore, the property has not been sold or transferred to anyone else, and will remain in the grantor’s possession until the transfer of the deed.
A grant deed may exclude certain title guarantees, however, such as the protection of an easement. To protect the interests of all parties involved — particularly the grantee — title insurance should be purchased.
A standard policy of title insurance is a title policy that protects consumers from defects in title in matters relating to public records, forgery, tax liens, corporation deeds, and non delivery. In the event that a grantor violates any of the deed’s implied covenants, a grantee may have the right to recover damages. (Title insurance will be explored in greater detail in Chapter 9.)
Color of title is the claim that a title is valid, when it is actually defective. This may stem from a deed not being registered properly, or at all.
Defective title (or defective recording) refers to a property with conflicting ownership rights. This involves one party claiming to be a property owner, when in reality the interests of the property are either divided amongst parties or are someone else’s entirely.
After-acquired title refers to title that is acquired by a first party after a second party has transferred the property to a third party. In other words, a seller who may be the owner of a property/title in the future may sell that property/title to a buyer while not being the current property/title owner. In this case, the title will be transferred to the buyer once the seller acquires the title from the current owner.
For example, assume John has stake in a ranch owned by his father. If John wants to sell his stake in the property and finds a buyer, a title transfer will only occur upon the transfer of title from John’s father to John. Otherwise, the property cannot be sold.
Quiet Title
An action to quiet title is a legal action used to establish a party’s title to property and remove (“quiet”) any challenges or claims to that title. Once a property title is clear, a party has the ability to sell or refinance the property.
A quiet title is used in matters relating to:
Tax problems
Adverse possession
Fraudulent conveyance
Boundary disputes
Surveying errors
In a grant deed, the grantor implies certain conditions in order for the grant deed to be executed. The grant deed warrants that:
Grantors ownership to the property has not been conveyed to anyone else.
The property does not have other liens of which the buyer is aware.
This document helps ensure the grantee that there are no third parties who hold interest in the property and also indicates that the grantor is current with property taxes. A grant deed proves the title holder’s interest in the property.
The grant deed offers a stronger level of protection for the grantee compared to quitclaim deeds because of the grantors implied title guarantee. For this reason, grant deeds are the most common type of deed and are typically the standard choice of most legal experts. The warranty of interest in a grant deed is, however, not as strong as a warranty deed because the warranty deed guarantees that the title is clear.
The issue of selecting which deed is best suited for an individual becomes negligible because the purchase of title insurance renders the title company liable for damages instead of the grantor.
There are different kinds of grant deed, each serving a unique purpose. Standard grant deeds are the most common. Another grant deed often used is the interspousal transfer grant deed that permits partners to move property exclusively with one another.
Case Law As It Relates to Grant Deed
Case Review: Anderson v. Reynolds (1984)
The case, Anderson v. Reynolds (1984) 588 F.Supp. 814, involved intentional fraud in a grant deed transfer.
A property owner (Anderson) put her property up for sale. An opera singer (Reynolds) claimed to know a famous movie star who wished to purchase the property, but only if the star dealt directly with Anderson, not an agent. Against the advice of her professional advisors, Anderson tendered a grant deed to Reynolds with the intent of transferring it to the famous movie star. Reynolds’ attorney recorded the deed, then executed several additional deeds that transferred the property not to the famous movie star, but to Reynolds himself. Anderson brought legal action against Reynolds. She sought the cancellation of the grant deed and the subsequent deeds that granted the property to Reynolds.
The Superior Court contended that Reynolds had engaged in intentional fraud by falsely misrepresenting his claims. It held Reynolds guilty and ruled the previous grant deeds to be null and void. The property was returned to the full possession of Anderson.
