Five Tips Every Real Estate Practitioner Should Know About Defective Deeds
In the modern world of real estate, time constraints and urgency seem to lurk at every turn. As a result of these two factors, errors in the preparation of deeds abound. Title examiners and real estate practitioners frequently encounter defects in deeds in the chain of title and make requirements for corrections or other remedies where necessary. Although some errors in deeds are harmless and may be ignored, others are fatal to the conveyance and require corrective measures. This article discusses five tips every real estate practitioner should know about defective deeds: 1) harmless errors; 2) curative statutes; 3) corrective deeds; 4) constructive notice; and 5) homestead concerns.
Tip 1: Harmless Errors
When a practitioner encounters an error in a deed, the first determination should be whether the error is harmless or whether the error is fatal to the conveyance or results in failure to provide constructive notice of the conveyance. A harmless error will not prevent the passage of title or the legal recordation of the instrument and may be ignored altogether, although the error should be corrected on an instrument in a current transaction. Although not an exhaustive list, we will discuss two examples of common harmless errors.
One example of a harmless error is where a call in a metes and bounds description states an incorrect distance or angle, but the distance or angle is monumented to or along a monument or other point that, under a rule of construction, controls the distance or angle. To illustrate, a call in the description states “run thence north 89 degrees east along the north line of Jones Avenue a distance of 100 feet to the northeast corner of said lot one.” The north line of Jones Avenue is actually north 87 degrees east. The error in the angle is harmless because the angle yields to the monumented north line of Jones Avenue (north 87 degrees east). In fact, the call could actually leave out the angle completely and still be sufficient; “run thence east along the north line of Jones Avenue a distance of 100 feet to the northeast corner of said lot one.”
Although the lot lines and corners of platted lots are not actually monuments in the true sense, as a rule of construction, the lot lines and corners of platted lots may also be used to control the angles and distances in legal descriptions. So, if the actual footage of the above call is 102 feet, that error is also harmless because the call distance yields to the actual distance to the northeast corner of said lot one.
Another example of a harmless error is the lack of a date, or an incorrect date on an instrument, such as a deed or mortgage. Florida Uniform Title Standard 3.6 states “[t]he fact that an instrument such as a deed or mortgage is undated, bears a date subsequent to the date of the acknowledgement, or bears an impossible date does not affect the validity of the instrument as a muniment of title.” It should be noted that the true date of a valid deed is when the deed is delivered to the complete control of the grantee, with no conditions or contingencies.1
Tip 2: Curative Statutes
Deeds that contain defective acknowledgements or are missing witnesses may be cured over time. The two primary curative limitations statutes (F.S. §95.231 and F.S. §694.08) cure the defects of missing witnesses and defective acknowledgements. It should be noted that these statutes do not cure a total lack of acknowledgement or a void acknowledgement. The curative time period under F.S. §95.231 is five years after the date of recording. F.S. §95.231 cures defects in which the person2 (i.e., grantor) was the actual owner of the property.
In situations where a person conveys land in an official or representative capacity (e.g., an attorney-in-fact or trustee), F.S. §95.231 does not apply, but it may be possible to rely on F.S. §694.08 if two requirements are met. First, the deed must be of record for the statutorily required seven years. Second, one or more subsequent conveyances of the subject property by the parties claiming under the instrument must be made and the subsequent instrument must evidence the grantor’s intent to either convey the property or to authorize the conveyance.
For example, a deed executed by an attorney-in-fact is missing a witness. The defective deed was recorded in 1999. A subsequent conveyance was made in 2001. In 2007, the grantee under that 2001 deed entered into a contract to sell the property. Because more than seven years has passed and a subsequent conveyance was made, the curative statute “cures” the missing witness on the 1999 deed.
Tip 3: Corrective Deeds
A corrective deed is appropriately used where a defect in the previous deed caused title not to pass to the grantee. An insufficient legal description of the property, a lack of subscribing witnesses, and failure to obtain joinder of the grantor’s spouse on a deed to homestead property are a few examples of this type of defect. Where legal title remains in the grantor because the deed did not pass legal title, a corrective deed executed by the original grantor is often used to remedy this undesired result.
Another situation requiring a corrective deed is where a deed, sufficient of itself as a conveyance, lacks a proper acknowledgement. The lack of proper acknowledgement results in the deed not being legally entitled to record, and, although the deed may be valid and effective between the parties, its recordation will not impart constructive notice of the conveyance. As a result, subsequent creditors, purchasers, or lenders of the grantor may assert their claims against the property.
One common mistake is the attempted use of a corrective deed to divest an unintended grantee. For example, if John Doe and Fred Doe, his brother, intended to take title as tenants in common, but only John appears as a grantee on the otherwise valid deed, a corrective deed from the original grantor to John Doe and Fred Doe will not suffice to vest title in both parties. The reason is because the legal (record) title passed from the grantor to John. Thus, the grantor has no title to convey in the purported corrective deed. Since title passed to John, the correct procedure to remedy this error would be for John to convey title to himself and Fred.
Another common mistake is the improper use of a “corrective deed” in an attempt to re-vest title in the grantor where the original deed described more land than the grantor intended to convey. Although the “corrective deed” will convey to the grantee any additional property described therein owned by the grantor that was not described in the original deed, it will not re-convey to the grantor any portion of the land unintentionally included in the original deed which is not included in the description in the corrective deed.3 The concept here is that the unilateral act of the grantor in deciding the intentions of the parties is not binding on the grantee, and, for title insurance purposes, acceptance of the deed by the grantee is not normally sufficient to re-vest the title in the grantor. Therefore, a deed from the grantee back to the grantor would be the proper way to vest title back to the grantor. For example, assume that grantor owned lots one, two, and three. Where grantor and grantee intend grantor to convey lots one and two, but through inadvertence, grantor conveys lots two and three, it will be necessary for the grantee to convey lot three back to the grantor, even if grantor gave a corrective deed describing lots one and two.
Probably, the most common mistake in dealing with defective deeds is the belief that the defective deed may be corrected by merely correcting the error and re-recording the deed without re-execution, witnessing, and acknowledgement. Except in rare instances, this unilateral act will not be sufficient to correct the error, because some of the necessary elements for a legally effective conveyance are lacking.4 Generally, the necessary elements of a legal conveyance of real property include, but are not limited to, signature of the deed by the grantor in the presence of two subscribing witnesses. As mentioned previously, a proper acknowledgement is not required for validity but to entitle the deed to be recorded so as to provide constructive notice. In Connolly v. Smith, 97 So. 2d 865 (Fla. 3d DCA 1957), cert. denied, 101 So. 2d 811, the Third District Court of Appeal held that parol evidence was not admissible to illustrate what land the grantor intended to convey. In Connolly, the grantor conveyed two parcels of land via a deed.5 One of the parcels was described in an incomplete and ambiguous manner (the legal description in the deed did not include the section, township, or range).6 The grantee subsequently inserted the missing elements of the legal description and re-recorded the deed.7 The court held that the grantee’s unilateral act was ineffective to correct the deed.8
To illustrate, a grantor executed a deed at closing for lot 14, where the intended description was actually lot 41. When the error was discovered (whether before or after recordation is immaterial provided it was discovered after execution), the closing agent, grantee, or other party amended the description to state lot 41 and recorded or re-recorded the deed, as the case may be. Since the grantor did not execute the amended deed (a vital requirement), it would also naturally lack the two necessary subscribing witnesses and the necessary acknowledgement, and would therefore not pass title to lot 41, nor be entitled to be recorded. Even if the grantor initialed the amended description, there is some question whether this constitutes re-execution, and even if it did, the deed still lacks the necessary two subscribing witnesses and acknowledgement. Were the grantor to initial the deed prior to the witnesses signing the deed and prior to the acknowledgement, there would be a stronger argument for validity, but when a title examiner views the deed, the examiner will not know whether the initials were placed before or after the witnesses signed or the signature was acknowledged.
Another issue that frequently arises is the best manner in which to fix several erroneous deeds in the chain of title. While examining the chain of title, the practitioner may discover that the deed into the current owner and several preceding conveyances in the chain contain erroneous legal descriptions. In that situation, the practitioner does not need to obtain corrective deeds from each party in the chain of title. Instead, a deed from the grantor who first conveyed by deed with an erroneous legal description may be executed in favor of the current owner. However, a judgment search on all owners in the chain of title should also be made.
Tip 4: Constructive Notice
Although many people assume a deed must be recorded to be valid, a deed can be valid between the parties to the deed without recordation.9 However, to be effective against third-party purchasers for value without actual knowledge of the deed, the deed must be recorded according to law.10 With few exceptions, in order to be legally entitled to record, the deed must also contain an acknowledgement. A deed recorded with no acknowledgement or a defective acknowledgement is merely spread upon the record, but generally does not impart constructive notice of its existence.11
For example, assume that a properly acknowledged unrecorded deed contains all the proper elements for validity, such as a competent grantor who has legal title, a granting clause, a sufficient legal description, and two subscribing witnesses. Such a deed would be valid as between the grantor and grantee, but would not be valid as to one who accepted a subsequent and otherwise sufficient deed from the grantor without notice of the first deed. Since the first grantee did not record his deed prior to the second grantee acquiring his interest, the second grantee would prevail over the first grantee.12 Thus, validity between the parties is not, of itself, sufficient for title insurance purposes, and to be insurable an instrument must not only be valid but must also be recorded; and recorded in such manner as to put prospective purchasers on notice of its existence.
Florida’s recording statute, F.S. §695.01, states, in part:
No conveyance, transfer or mortgage of real property, or of any interest therein, nor a lease for a term of one year or longer, shall be good or effectual in law or equity against creditors or subsequent purchasers for a valuable consideration and without notice, unless the same be recorded according to law.
A reading of the statute might lead one to conclude that recording of an instrument constitutes notice to the world of its existence. However, as a general rule, to be effective as to third parties without notice,13 the instrument must be drafted in such manner as would cause it to fall within the chain of title to the affected property.14 For the limited purposes of this article, falling within the chain of title means that the instrument is sufficiently drafted to place parties on notice that the owner has either conveyed the property or subjected it to a lien or encumbrance. From a practical standpoint, this means that, where properly indexed by the clerk, the recorded instrument would be discovered in an accurate search of the owner’s name during his or her period of ownership in the clerk’s indexes to the official records.
To illustrate, John Doe wants to refinance a parcel of real property. In the loan application, John uses his full name, William J. Doe. Accordingly, the loan closing package, including the mortgage in favor of Big Lender, Inc., which the lender prepared, reflects William J. Doe as the mortgagor. The closing attorney notices the slight discrepancy (the commitment reflected John Doe in title, as per the recorded deed), but decides that, since the mortgagor was surely the same person as the owner of record (both his driver’s license and passport reflected William J. Doe), all is well. For “good measure,” the attorney obtains a “one in the same” affidavit for the file. After the closing, the attorney promptly records the mortgage and issues a loan policy. It should be noted that the mortgage contains a sufficient legal description and is proper in all other respects.
The following year, John encounters financial difficulty due to the poor real estate market. John finally finds a cash purchaser for the property and the purchaser’s attorney orders a title search report from another title underwriter. The purchaser’s attorney provides the title underwriter with a copy of John’s owner’s policy (his owner’s policy reflects the original mortgage that was satisfied of record when John refinanced). However, the new title commitment does not reflect the refinance mortgage with Big Lender, Inc. When John realizes the error, he sees a chance for a windfall and decides to keep quiet about his mortgage with Big Lender, Inc. The closing occurs, and John receives net proceeds that exceeded the amount he would have received had the mortgage with Big Lender, Inc., been paid. An owner’s policy is issued insuring the new purchaser. John uses the money to pay off some of his debt, but he unfortunately dies in an accident a few weeks later.
After the mortgage goes into default for no-payment, Big Lender, Inc., sends its mortgage to its attorney for foreclosure. The attorney files a foreclosure action and names the current owner as a party defendant. When the owner is served a copy of the complaint for foreclosure, the owner files a claim with his title company. At first blush, the resolution to this situation appears to be simple. Clearly, the second title company missed the mortgage with Big Lender, Inc., which was a valid mortgage and was recorded, so it should bear the burden of its mistake. Or, perhaps that situation is not as clear as it first may appear.
When the title policy insuring John Doe was provided, the searcher for title for the second title company searched the name indexes in the clerk’s office. Generally, the clerks in most Florida counties do not maintain a geographic tract index, only an index by names. The searcher searched the name of John Doe (as per the deed) from the date of John’s deed forward. The searcher failed to discover the mortgage in favor of Big Lender, Inc., because the clerk indexed the Big Lender, Inc., mortgage under the name of the mortgagor, William J. Doe. The second title company agrees to undertake a defense of its insured until it learns that the purchaser had no notice whatsoever of the Big Lender, Inc., mortgage. Consequently, the attorney for the second title company files an answer alleging that Big Lender, Inc.’s, mortgage does not appear within the chain of title and is, therefore, not effective (invalid) as to the interest of the purchaser/owner. This affirmative defense argues that the Big Lender, Inc., mortgage is not a lien on the title of the current owner. Next, Big Lender, Inc., files a claim with its title company, because the validity of its mortgage was being challenged. And the purchaser probably will, barring other legal issues not covered here, prevail, because the failure of the Big Lender, Inc., mortgage to appear within the chain of title resulted in its ineffectiveness as to a subsequent purchaser (our new purchaser) without notice.
This illustration of the importance of constructive notice compels us to verify that all parties in title are not only reflected as grantors in the heading of the instrument, but that the name stated in the instrument matches the name of the party in title, or is similar enough to be found by a search of the owner’s name.15
Tip 5: Homestead Concerns
Another common cloud on title associated with deeds is the failure to state on the deed the grantor’s marital status and whether the property is the grantor’s homestead. For a married person to alienate homestead property by deed, mortgage, or gift, the Florida Constitution requires joinder of the owner’s spouse on the instrument.16 The requirement for spousal joinder is triggered only where two conditions exist at the time of the deed: 1) the grantor is married; and 2) the property is the grantor’s homestead. Where the grantor is unmarried, or where the property is not the grantor’s homestead, the joinder requirement does not apply.
If a recorded deed does not indicate the marital status of the grantor or the nonhomestead status of the property, then a cloud is generally created because of the uncertainty of the facts and the possible invalidity of the deed. Generally, deeds to homestead property given by a married person without spousal joinder are considered void. Sometimes, title examiners require corrective deeds to remedy such a cloud on title, but in fact, where it can be shown by parole evidence that either the grantor was unmarried at the time of the deed or the property was not the grantor’s homestead at said time, the recordation of an affidavit will clear the cloud.
In a busy real estate practice, defective deeds are frequently encountered. applying these five simple tips, real estate practitioners can help prevent title problems and title insurance claims.
1 See Ellis v. Clark, 23 So. 410, 412 (Fla. 1897) (holding that delivery of a deed by the grantor and acceptance by the grantee are essential to transfer title). See also Bould v. Coe, 63 So. 2d 273 (Fla. 1953) (holding that a deed takes effect upon delivery); Jeffords v. Jeffords, 148 So. 2d 43 (Fla. 1st D.C.A. 1962) (noting that “[i]t has long been the law of Florida that it is essential to the validity of a deed of land that there be voluntary delivery of it by the grantor to the grantee or to someone on his behalf, and an acceptance thereof by him with the mutual intention of the parties to pass title to the land.”); Lance v. Smith, 167 So. 366, 466 (Fla. 1936) (holding that “[w]ithout delivery a deed may be said to be at most a mere proposition to convey. Delivery has been called the life of a deed.”); Mattox v. Mattox, 777 So. 2d 1041 (Fla. 5th D.C.A. 2001), reh’g denied, (2001).
2 Fla. Stat. §1.01(3) states that the word “person” includes “individuals, children, firms, associations, joint adventures, partnerships, estates, trusts, business trusts, syndicates, fiduciaries, corporations, and all other groups or combinations.”
3 See Fla. Uniform Title Standard 3.2, which states that “[a] grantor who has conveyed land by an effective and unambiguous deed cannot avoid the effect of such conveyance by executing a new deed making a change in the conveyance, even though the latter deed purports to correct or modify the former.”
4 For example, if a legal description was not attached to the recorded deed through inadvertence, it may be possible to re-record the same deed attaching the legal description and an affidavit of delivery. Such action would be based on Florida Uniform Title Standard 16.2 entitled “Delay in Recording Conveyance.” The title standard states, “[d]elay in recording a conveyance will not affect the title thereby acquired except where there are intervening rights of a third person.”
5 Connolly, 97 So. 2d 865.
6 Id. at 866.
7 Id. at 867.
9 See Fla. Stat. §695.01.
10 See Fla. Stat. §689.01.
11 See generally McDaniel v. McElvy, 108 So. 820 (Fla. 1926).
12 See Van Eepoel Real Estate Co. v. Sarasota Milk Co. et al., 29 So. 892 (Fla. 1930).
13 See Sackheim v. Marine Bank & Trust Co., 341 So. 2d 247, 248 (Fla. 2d D.C.A. 1977) (noting that “[t]here are three types of notice by which a party may be held to have had knowledge of a particular fact: actual notice, implied notice (or implied actual notice), and constructive notice.”).
14 See generally Love v. Elliott, 350 So. 2d 93 (Fla. 1st D.C.A. 1977).
15 It should be noted that Fla. Uniform Title Standard 10.2 states that “[d]ifferently spelled names are presumed to be the same when they sound alike, or when their sounds cannot be easily distinguished, or when common usage has, by corruption or abbreviation, made their pronunciation identical.”
16 See Fla. Const. art. X, §4 (c).
Stacy O. Kalmanson is vice president and Florida state counsel for Land-America Financial Group, Inc. (holding company for Lawyers Title Insurance Corporation and Commonwealth Land Title Insurance Company). She received her undergraduate degree from the University of Florida and her J.D. from the University of Florida Levin College of Law.
Jerry Morris is vice president and senior underwriter for Commonwealth Land Title Insurance Company. Mr. Morris holds a certified land searcher designation from the Florida Land Title Association. He has been in the title industry since 1970.
This column is submitted on behalf of the Real Property, Probate and Trust Law Section, Melissa Murphy, chair, and William P. Sklar and Richard R. Gans, editors.