Most real estate issues can be resolved by drafting the appropriate documents for everyone’s signature and litigation usually is not necessary unless there is a dispute.
An attorney often prepares deeds, easements, and road agreements to clear up ownership issues to property, give access to a property, or create a shared driveway or water well agreement. Owning real estate can present situations where a deed is necessary to transfer ownership or clear up a past ownership problem on the title.
There are different types of deeds used in transferring property and it is important to understand the difference in Missouri between a General Warranty Deed, Special Warranty Deed, and Quit Claim Deed.
General Warranty Deed
A General Warranty Deed is best for purchasers of property because the language in the deed states that the seller is warranting that they have “an indefeasible estate in fee simple,” which essentially means that the seller is the clear owner of the property without dispute. It also states that the seller has a good right to convey the property and that it is free of any encumbrances, other than those currently recorded against the property. The seller is agreeing to warrant and defend the title against lawful claims brought by anyone concerning any issue involving the title to the property created at any time during the history of ownership of the property back to the issuing of the patent by the U.S. government. Because this is the best language in a deed for purchasers of property, most title companies insuring the buyer’s interest in the property will require that a General Warranty Deed be used in the sale of the property.
Special Warranty Deed
A Special Warranty Deed limits the warranty made by the seller in defending against lawful claims. The seller only agrees to defend against those actions the seller was responsible for during the time of their ownership of the property. This means that a full clear title is not warranted. When lenders foreclose on a property, they usually refuse to use anything other than a Special Warranty Deed to transfer the real estate to a new buyer because they do not want to take on any liability for issues with the title created at any time prior to their ownership of the property after the foreclosure.
Quit Claim Deed
Quit Claim Deeds are often used when a General Warranty Deed or Special Warranty Deed should be used instead. In a Quit Claim Deed, there are no warranties, so it is the least desirable to purchasers. When transferring property between owners, it is best to keep the chain of warranties intact by using a General Warranty Deed to transfer the real estate. In addition to containing no warranties, a Quit Claim Deed simply conveys whatever title interest the granting party has. If they have no interest, it conveys nothing. The most appropriate use of a Quit Claim Deed is when a party may or may not have an ownership or lien interest in the property and it is necessary to have the party release or grant that potential interest to the current owner in order to clear up title defects.
What is a Beneficiary Deed and how does real estate avoid probate by using it?
A great way to avoid having real estate go through probate when you die is to use a Beneficiary Deed. Section 461.025 of the Missouri Non-Probate Transfers Law permits almost a “will-like” provision to be incorporated in a deed naming a beneficiary or beneficiaries while stating that the deed is not to take effect until the death of the owner, or the last to die of two or more owners. The language must meet the requirements of Missouri law and the Beneficiary Deed must be recorded prior to the death of the owner. The deed is effective on recording; however, it does not take effect until death. This allows the owner to keep the ability to sell the property, take out a mortgage, or do anything else that full ownership permits because the beneficiary has no current interest in the property while the owner is alive. The Beneficiary Deed may be revoked by recording a revocation deed or by recording another deed unless the original beneficiary deed provides that it is irrevocable.
**Special caution must be used when only one spouse owns property and desires to utilize a Beneficiary Deed since a real estate attorney must draft specific language for the deed regarding the signature of the non-owner spouse.
How do you determine whether to own the property as Tenants in Common, Joint Tenants, or Tenants by the Entireties when property is owned by more than one person?
Multiple owners of property can hold their interests together as Tenants in Common, Joint Tenants, or Tenants by the Entireties. If you own the property as “John Doe and Sam Smith,” the ownership is Tenants in Common. If the intent of the parties is not stated on the deed, ownership will be presumed to be a tenancy in common. A tenancy in common is a form of ownership whereby each owner holds an undivided interest in the property. Upon the death of one tenant in common, their interest will pass to their own heirs, not to the other owner. If the property is owned by “John Doe and Sam Smith, as joint tenants with right of survivorship,” the ownership is a Joint Tenancy. To create a joint tenancy, the deed must specifically state that the parties are taking the title as joint tenants. Upon the death of one owner, the surviving joint tenant immediately becomes the owner of the real estate, this is known as “right of survivorship.” Tenants by the Entireties is created when the property is owned by “John Doe and Jane Doe, husband and wife” and is a form of ownership that can only be held by a husband and wife. The deed must specifically state that the purchasers are husband and wife or that they are taking the title as tenants by the entireties. A legal “fiction” is created where the two are seen as one entity. There is a right of survivorship similar to a joint tenancy in that upon the death of one spouse, the surviving spouse becomes the sole owner of the whole property.
What is an easement?
An easement is an interest held in the land of another person where the right of partial use of the land is given for a general or specific purpose. An easement restricts but does not reduce the rights of the owner to the use of their own land. Easements are generally created by either an express grant of a right to another or by reserving a right for oneself when making a deed of property. There are two basic classifications of easements: “in gross” and “appurtenant.” An in gross easement is a personal right to use land and is only given to one specific person and cannot be utilized by others unless that person assigns the right to another. An appurtenant easement runs with the land and will continue to be effective as to every future owner of the land indefinitely unless expiration is expressly provided for or until it is released.
Driveway/Road and Water Well Agreements
Easements for use of roads or other matters also occasionally need to be prepared. Particularly with rural properties, shared road agreements and water well agreements become necessary in order to address the issue of shared maintenance between multiple parties.
Occasionally, two homes in a subdivision will share a driveway, which also requires an agreement concerning usage and maintenance. Additionally, issues sometimes occur concerning buildings or fences encroaching on a neighboring property.