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Understanding the Commonly Used Deeds for Transferring Real Estate and the Interests Affected

The Grant Deed.

A Grant Deed is generally used to transfer ownership in real estate.  By using a Grant Deed, the transferor makes warranties to the title of the property being conveyed and promises that he or she is the owner and that such interest in absolute and not encumbered in any way.

Civ. Code, § 1092 provides a simple form for a Grant Deed. Any grant of an estate in real property may be in substantially the same form as the statutory form in Civ. Code, § 1092. A Grant Deed that conforms to Civ. Code, § 1092 is used to transfer title to real property. Civ. Code, § 1105 sets out a presumption that whenever a parcel of real property is conveyed by Grant Deed, fee simple title is presumed to have been passed unless the deed indicates that a lesser estate was intended. Unless otherwise expressly set forth, a Grant Deed implies the existence of two covenants [Civ. Code, § 1113]:

1. That before the date of execution, the grantor has not conveyed the same estate or any right, title, or interest in the estate to any person other than the grantee; and

2. That the property is free from encumbrances done, made, or suffered by the grantor or any person claiming under the grantor.

To be valid Grant Deed specifically must provide all of the following. 

A. Parties. The deed must specify a grantor and a grantee with capacity to convey and receive title to real property. The grantee need not be mentioned by name as long as the designation and description is sufficient to identify the grantee.

B. Property description. The deed must contain the legal description of the property whether or not the document is going to be recorded. 

C. Signature. The deed must be signed by the grantor or the grantor’s agent. The authority of the agent to execute the deed must be in writing Civ. Code, § 1091.

D. Acknowledgment. The acknowledgment is not needed for the document to be effective, but is required for recordation. [Gov. Code, §§ 2728727288Civ. Code, §§ 1169 et seq.] Any form of acknowledgment must be in substantially the same form as Civ. Code, § 1189.

Interspousal Grant Deed.

Since a grant deed is presumed to pass “fee simple” (or complete title) unless it appears on its face to convey a lesser interest, Interspousal Grant Deed conveys a fee simple interest between spouses. It is used in diverse circumstances, including to correct an erroneous vesting in a purchase transaction; to transfer interest in a marital property settlement; to break or establish a joint tenancy; to establish a tenancy in common; and to establish a presumptive community property interest.

One common use of an Interspousal Grant Deed is the requirement lenders impose on a married borrower when the spouse of that borrower is not going to be responsible for the loan as a borrower. 

Since the law generally bars foreclosure (or trustee’s sale) against a non-borrower spouse’s interest as a co-owner of a property, lenders regularly require the non-borrowing spouse to convey their entire interest in the property.  The instrument the lenders require to cause this interest to be transferred is an Interspousal Grant Deed.  Once executed, the lender can secure its loan by recording a deed of trust without a competing spousal interest to contend with if the loan falls into default.

Beginning July 1, 2001, married couples are able to elect to hold title to real property as “community property with right of survivorship.” The benefits of community property which allow a full step in tax basis are maintained, while a married couple can enjoy the benefits of the right of survivorship which was traditionally not available under the community property statutes. [See Civ. Code, § 682.1]

Quitclaim Deed.

A Quit Claim Deed conveys all of the transferor’s interest in real property to the transferee as of the date of execution, but without the warranties and guarantees of title as to any other interests. While a Grant Deed is presumed by law to pass fee simple title to real property, the Quitclaim Deed carries with it no presumption as to the estate being conveyed. The Grant Deed also implies the existence of the two covenants stated above, the Quitclaim Deed includes no covenants regarding title. The Quitclaim Deed transfers only the title or interest that the transferor holds at the time that deed is executed and even does not convey after acquired interests. it is generally held that a Quitclaim Deed does not convey after acquired title. 

It is often used by a transferor spouse to convey any community property interest held in the subject real property to the transferee spouse. It can also be used by an optionee to remove any cloud on the title of real property caused by an option to purchase. The Quitclaim Deed could be said to transfer whatever interest one has but doesn’t guarantee such transferor has any interest.

Recording the Deed.

While a deed should be recorded as soon as possible after the seller receives the purchase price, the failure to record it for an extended period will not cause the deed to become invalid or to violate the statute of frauds. Lee v. Lee, 175 Cal. App. 4th 1553, 97 Cal. Rptr. 3d 516 (5th Dist. 2009). In fact, recoding a deed is not particularly significant to the parties of a deed.  Rather, recording is of great importance with respect to the interests created in a deed as it pertains to all third parties, be it lenders, other persons, or governing bodies.

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