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Purchasing a property means buying the right to occupy a piece of land. As such, having a paper trail to prove ownership is vital to protecting your interest in a property. Usually, professionals with legal backgrounds take care of this but as a buy it is good to understand what exactly deeds are.

A property deed is a written and signed legal instrument that is used to transfer ownership of real property from the old owner (the grantor) to the new owner (the grantee). Historically, real property was transferred through a ceremonial act known as “livery of seisin.” In this act, the person transferring the land handed a twig or clod of turf from the land to the person taking delivery of the land. A verbal or written statement often accompanied the gesture, though it was the livery of seisin that legally transferred the title to the property. Today, title to real property is conveyed by a paper deed.

There are two types of alienation—voluntary and involuntary.

Voluntary alienation is the most common situation. The grantee willingly sells the property to the grantee and the deed is written down and recorded in order to document the transfer and guarantee the grantee’s ownership and use of the property (possibly subject to certain conditions). Or, maybe the grantee willed his or her property to the grantee, and the transfer of the title takes place after the grantee passes on.

As you might guess, an involuntary alienation stems from financial hardship (like a foreclosure or bankruptcy), or from a grantor who dies without a will in place that covers the property.

ESSENTIAL ELEMENTS OF A DEED

Although the definition of an act is quite simple the actual document is only valid if there are particular essential elements in place and some actions are taken.

GRANTOR

The grantor is the person who is offering (or conveying) the title. In the actual deed document, the grantor might be called the “party of the first part”.

GRANTEE

Naturally, the grantor is the person who receives the grantor’s title. The grantor may be called “the party of the second part” in the deed. Like a grantor, a grantor must provide the deed with a legal name and address.

CONSIDERATION

To document the change in title ownership completely, the deed at least must acknowledge that something valuable was exchanged for the property. That “something valuable” is called consideration.

GRANTING CLAUSE

The granting clause is the most important part of the act, as it sets out the desire of the grantee to transfer (or transfer) the title to the grantee, as well as the rights that the grantee receives through the ownership of the title.

While each state has its own requirements, most deeds must contain several essential elements to be legally valid:

  • It must be in writing. While most deeds are completed on printed forms, there is no legal requirement that any specific form be used as long as the essential elements are included.
  • The grantor must have legal capacity to transfer the property and the grantee must be capable of receiving the grant of the property. A person who is competent to make a valid contract is considered competent to be a grantor.
  • The grantor and grantee must be identified in such a way as to be ascertainable.
  • The property must be adequately described.
  • Operative words of conveyance must be present. All standard form deeds include the necessary legal language that actually transfers the property.
  • The deed must be signed by the grantor or grantors if the property is owned by more than one person.
  • The deed must be legally delivered to the grantee or to someone acting on the grantee’s behalf.
  • The deed must be accepted by the grantee. Typically, deeds are accepted by the grantee but in certain circumstances, the grantee could reject delivery of the deed.

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