As most people are familiar, a deed is used in the transferring of ownership in one piece of land to another. Fewer are aware of the effect the recording of a deed has on the property. Arguably, the transfer of title from one to another is not an exact science. The purpose here is to address deeds in which the owner of record is incorrect, usually in the manner in which the Grantee (owner) is named, i.e. such as the name of a corporation holding title/ownership. This article does not address Title Insurance.
This is the most common form in which title is transferred from one party to another in California. The use of a grant deed is to convey ownership, in whole or in part, from the current owner, (Grantor) to the new owner (Grantee). In this instance, the Grantor promises the Grantee that all of the Grantor’s rights to the property then held are conveyed, or transferred to the Grantee. Think of a grant deed as a warranty that is implied from the Grantor that title is free and clear from encumbrances such as varied types of liens, taxes, or other assessments.
Please note that the property may still be encumbered by prior easements or other restrictions placed upon it, but those items must be fully disclosed to the Grantee and those of record are usually listed in a Preliminary Title Report.
The California Government Code provides that, after being acknowledged (executed in front of a Notary Public, or properly witnessed as provided by applicable law), any instrument or judgment affecting the title to or possession of the real property may be recorded. In other words, the information contained in the deed is entered into the public land records maintained by the appropriate local government agency, usually a County’s recorder’s office.
The recording of a document with the recorder’s office provides constructive notice to every one of a prior interest that would be revealed by an appropriate search of the public records affecting the ownership. A subsequent purchaser is charged with notice, (by statute) of any such prior interest even if they never actually conducted a title search. In other words, once a deed has been recorded, an interested party cannot claim they were not aware of the prior party’s interest in the land as they are said to be “charged” or held accountable for having received notice.
A recorded document provides constructive notice if it meets the formal requirements for recording, contains no technical defects on its face, is recorded in the chain of title, and is properly indexed. However, improperly index records by the recorder may not prevent constructive notice.
While recording a deed does not affect its validity, it is extremely important to record since recordation protects the Grantee. If a Grantee fails to record, and another deed or any other document encumbering or affecting the title is recorded, the first Grantee’s interest is or could be in jeopardy.
Delivery and Acceptance
A deed need not be recorded to pass ownership but must be delivered. In this instance, delivery does not mean that it has to be physically handed to, or in the possession of the Grantee. Rather, delivery, in this case, is the Grantor’s immediate intention to pass title immediately upon signing the deed.
The law presumes a valid delivery if the deed is found in the possession of the grantee or has been recorded, but such presumption is rebuttable. One example is a deed that was entrusted to a third-party with directions that it be delivered to the Grantee upon the performance of a condition.
A duly executed deed is presumed to be delivered as of its date of execution. The date a deed has been signed is often different from its recorded date. Barring the performance of a condition, possession or the rights thereto must be given when the deed is delivered, i.e. signed by the Grantor.
Inconsistent Names in Deeds:
As is often the case, what is commonly known as a cloud on the title will arise from a defective deed in which the Grantee is erroneously named. As an example “The Church of California”, is named as the Grantee, but the legal name in which the church incorporated is actually “The Church of California Inc.”. Here, the first church may not actually exist as a corporation or a legally registered unincorporated association. In either case, the named Grantee on the deed owns the Property, not the second intended Grantee church.
What the above represents is an incomplete record of title as there is no direct connection in the chain of title. The chain of title represents a direct connection by name between the different owners as ownership transfer from one party to another. In short, when the “The Church of Southern California” elects to sell the property, a cloud on the title will cause that sale to: 1) not be effective as the grant deed names a different corporation; and 2) the subsequent instrument executed by the grantor to that grantee cannot impart constructive notice as discussed above.
Any instrument affecting the title to real property may be recorded by the county recorder of the county in which the real property is located. Recording consists of copying the instrument in the record book and indexing it under the names of the parties wherein every such every conveyance of real property provides constructive notice of its contents to subsequent purchasers.
Make sure all legal documents, leases, and records of title correct reflect the full and correct name of the corporation, entity, or individual.
Please see our other related articles
Holding Title to Property
Clouds on Title
The Escrow Process
Why Use Bushore Real Estate
Disclaimer: Every situation is different and particular facts may vary thereby changing or altering a possible course of action or conclusion. The information contained herein is intended to be general in nature as laws vary between federal, state, counties, and municipalities and therefore may not apply to any given matter. This information is not intended to be legal advice or relied upon as a legal opinion, course of action, accounting, tax or other professional service. You should consult the proper legal or professional advisor knowledgeable in the area that pertains to your particular situation.