Words of conveyance for a fee or less

Two types of deeds are used nearly exclusively to convey a real estate interest:

  • grant deeds; and
  • quitclaim deeds.

Often, grant deeds and quitclaim deeds are erroneously viewed as interchangeable, occasionally creating unintended liability for grantors. Other documents used to convey ownership or possessory interests in real estate are:

Two implied covenants exist in a grant deed conveyance. The covenants impose a personal obligation on each named grantor who signs, whether or not the grantor has an interest in the real estate described in the grant deed delivered to the grantor, typically a buyer.

Conversely, a quitclaim deed does not contain or carry with it either of the implied covenants of:

  • warranty of title; or
  • warranty against encumbrances.

The granting clause

The words of conveyance used in a deed depend on whether the deed is a grant deed or a quitclaim deed.

A grant deed is used to pass a fee simple interest in real estate from the grantor to another individual, unless a lesser interest is stated in the deed. While no precise words of conveyance are necessary, use of the word “grant” in the granting clause, without noting a lesser interest in the description of the property, indicates the conveyance of a fee simple interest in the described property. [See RPI Form 404]

Alternatively, a quitclaim deed is intended to convey whatever interest, if any, the grantor may hold in the real estate. No warranty is imposed that the grantor actually holds any interest in the property to convey, and no warranty is imposed that they have not encumbered title during any ownership they may have had.

The words of conveyance historically used in a quitclaim deed are “remise, release and otherwise quitclaim.” However, only the word “quitclaim” is required as the word of conveyance. The word “grant” is not used in a quitclaim deed since to be a quitclaim deed, no warranties are included with a conveyance. However, the parties to a quitclaim deed are referred to as the “grantor” and the “grantee.” [See RPI Form 405]

The type of deed used to convey property is evidence of the future role the individual conveying title undertakes. Thus, a grant deed is used to convey real estate with covenants relating to the interest conveyed. A quitclaim deed is used to simply convey any interest in real estate without any assurance the individual named as grantor holds an interest to convey.

Grant deed covenants are implied

The covenants, sometimes called warranties, implied in a grant deed include:

  • the interest conveyed in the real estate has not been previously conveyed to another, except as disclosed in the grant deed; and
  • the grantor has not further encumbered the real estate, except as disclosed in the grant deed. [Calif. Civil Code §1113; see RPI Form 404]

Grant deed covenants are implied. Thus, they are not separately bargained for as provisions to be included in the grant deed conveyance.

If a grant deed covenant is breached by a seller (grantor), the buyer (grantee) may recover their money losses from the seller for the breach of the implied covenant, as though the covenant had been written into the grant deed. [CC §1113]

Consider a married individual who sells a parcel of real estate they solely own.

Before issuing a title insurance policy to insure the conveyance of marketable title to the property against any potential community property claim of the seller’s spouse, the title insurance company requests that the spouse join in the grant deed by signing it as the spouse of the grantor.

The spouse signs the grant deed for the sole purpose of releasing any community property interest possibly acquired as a result of the marriage — even though the spouse acquired no interest in the real estate.

After closing, the buyer of the property discovers a tenant who holds a lease which the buyer did not agree to in the purchase agreement as a condition of title or by reference in the grant deed. As a result, the buyer incurs money losses to relocate the tenant. Meanwhile, the seller dies but is survived by the spouse who joined in the conveyance.

The buyer now seeks to collect their tenant relocation expenses from the seller’s spouse for breach of the implied covenant in the grant deed signed by the spouse. The implied covenant warrants the grantor has not encumbered title to the property in any manner, such as creating a lease which was not included as a title condition in the purchase agreement.

The seller’s spouse who joined in the conveyance claims a spouse cannot be liable for the breach of the covenant against further encumbrances when the spouse never had an interest in the property to convey, and that the buyer’s only remedy is against the deceased seller.

Here, the spouse is liable for the breach of the implied covenant against further encumbrances. The spouse signed the grant deed as a grantor.

Since the spouse voluntarily participated as a grantor in the conveyance and did not enter into the conveyance through mistake or fraud, the spouse as a grantor breached the implied covenant against further encumbrances by failing to state the property was subject to the lease. [Evans v. Faught (1965) 231 CA2d 698]

To avoid the exposure to liability imposed by the implied covenants in the grant deed, the spouse needed to sign only a quitclaim deed to either the seller or the buyer.

The covenant against encumbrances

Encumbrances are the subject of the implied warranty against encumbrances in the grant deed, since they burden title and depreciate its value. Real estate encumbrances include all liens, voluntary or involuntary, attached to the real estate. [CC §§1113, 1114]

Examples of real estate encumbrances include:

  • taxes;
  • assessments;
  • covenants, conditions and restrictions (CC&Rs), such as covenants and use restrictions running with the land;
  • building restrictions;
  • a reservation of a right-of-way;
  • an easement;
  • an encroachment;
  • a lease; and
  • a pendency of a condemnation action. [Evans, supra]

Quitclaim deeds: you have what I had if I had it

A quitclaim deed terminates any interest in the real estate described in the deed which may be held by the named person (grantor) signing and delivering the quitclaim deed.

Unlike a grant deed, a quitclaim deed operates to release to the grantee all interest the grantor may hold in the property. [Platner v. Vincent (1924) 194 C 436]

A quitclaim deed passes whatever title, legal or equitable, the grantor possessed on execution (signing and delivering) of the quitclaim deed.

While a quitclaim deed is not intended to assure the conveyance transfers a fee simple ownership, the named grantor who holds fee title and signs and delivers a quitclaim deed conveys fee simple ownership of the property, and all the benefits of holding fee simple title. [Spaulding v. Bradley (1889) 79 C 449]

After-acquired title and quitclaims

Unlike a grant deed, a quitclaim deed does not also pass the grantor’s after-acquired title to the real estate described in the quitclaim deed. The quitclaim deed is a release of the grantor’s interest in the real estate at the time it is signed and delivered.

The individual signing and delivering a quitclaim deed does not promise to convey an interest in the real estate, much less agree they received it (seisin) and not previously conveyed or encumbered it (implied covenants).

However, after-acquired title will pass to a buyer named in a previous quitclaim deed if:

  • the seller sold by use of a quitclaim deed an unperfected right in the property which will later ripen into ownership, called an inchoate right, such as the interest held by a beneficiary under a will or inter vivos (living) trust prior to the death of the property owner [Soares v. Steidtmann (1955) 130 CA2d 401]; or
  • the seller is estopped (barred) by their sales agreement or their conduct from claiming the after-acquired title does not pass to the buyer.

The seller may not claim the after-acquired title does not pass when:

  • the quitclaim deed contains recitals or covenants, such as an assignment clause, showing the seller’s intention was not to limit the interest conveyed to only the interest the seller had at the time the quitclaim deed was executed; or
  • the seller has affirmed, or their conduct has implied, they actually had an interest in the property which was to be conveyed. [In re Wilson’s Estate (1940) 40 CA2d 229]

Transfer by transmutation

A quitclaim deed is commonly used in a transfer as a transmutation of community property rights.

Consider a husband and wife who buy property with money each earned during their marriage. Escrow is instructed to vest title to the property in the wife as her sole and separate property.

Concurrent with the recording of the grant deed to the wife, the husband signs a quitclaim deed clearing title of any interest he may have in the property.

Later, the property is sold and the wife’s conveyance is insured by a title company as a transfer of the entire fee ownership of the property. The husband does not sign and record another quitclaim deed, or join in the wife’s conveyance.

The title insurance company considers the husband’s deed on his wife’s acquisition of title to the property to be the only conveyance required since the quitclaim deed was recorded.

Within one year after recording the wife’s conveyance, the husband seeks to set aside the sale as voidable. The husband claims the original quitclaim deed was not a transmutation of their community property into the separate property of his wife since they only intended to vest the property so his name did not appear of record.

Here, the quitclaim deed is considered a written declaration which changes the characteristics of one spouse’s interest in the property from community to the separate ownership held by the other spouse.

The husband’s execution (signature and delivery) of the quitclaim deed transferred his interest in the community property interest to his wife as her separate property since the deed released all interest he held in the property. Thus, the spouse’s quitclaim deed transmuted the community property into the separate property of the other spouse. [In re Marriage of Broderick (1989) 209 CA3d 489]

A transmutation occurs when a married individual or couple transfers personal or real property from:

  • community property to a separate property interest of one spouse;
  • a separate property interest of one spouse to community property; or
  • a separate property interest of one spouse to the separate property interest of the other. [Calif. Family Code §850]

Further, a transmutation needs to be written and recorded to be effective against persons relying on the record title. The recording requirement gives notice to others who rely on the recorded title (such as title insurance companies, buyers, tenants or lenders) and whose rights may be affected by a transmutation, such as family members. [Fam C §852]