Wednesday, February 12, 2020
Deed Effectiveness – Signing and Delivery
Transferring real estate is often an essential aspect of farm and ranch estate and business planning. But, what does it take to effectively transfer title to real estate? Centuries ago in England, a ceremony was held on the land to be transferred and the seller would physically hand some of the soil to the buyer to commemorate the transfer of title to the buyer. That ceremony is not done today, but other requirements must be satisfied to signify that title has been transferred. Clearly a real estate deed must be signed, and the grantor must have the present intent to deliver the deed. But, based on the facts of a particular situation, those requirements may not be as straightforward as they might seem.
Transferring title to real estate – the signing and delivery requirements. These are the topics of today’s post.
The Signing Requirement
A real estate deed must be signed to be effective to convey title. That seems like a simple requirement to satisfy. However, facts can complicate the matter and raise a question of just exactly who must sign the deed. This was on display in a recent case. In In re Estate of Tatum, 580 S.W.3d 489 (Tex. Ct. App. 2019), a married couple had ten children. In 1982 they executed a warranty deed for their 134-acre farm, reserving a life estate in each of them and leaving a remainder interest to each of the children equally. One of the children died in 1999, with his interest passing to his surviving spouse. Later in 1999, the mother requested that the attorney draft a deed conveying the deceased son’s remainder interest back to the parents. This deed listed all ten children (including the surviving spouse of the pre-deceased child) as grantors, and it claimed to convey the farm in fee simple back to the parents. The deed made no reference to the undivided future interests of the children. There was no request that each child (and the surviving spouse of the pre-deceased child) sign the deed, but they understood that the deed would not be effective unless all of them signed it. Two of the children never signed the deed.
The father died in 2000. In 2001 and 2002 four of the children executed affidavits rescinding their signatures. In 2003 the mother and the children had a meeting requesting that the children transfer their interest to one of the children. Five of the children transferred their interest to this child resulting in that child holding a 6/10ths interest in the farm. An agreement could not be reached with the four remaining children. The mother then filed the 1999 deed in March of 2004.
The mother died in 2016 with a will that was based on the assumption that she owned 80 percent of the farm, because of the 1999 deed that eight of children signed. The estate executor sought a probate court determination that the 1999 deed transferred 80 percent of the remainder interest to the parents and that the affidavits were ineffective rescissions. Some of the children counterclaimed seeking validity and enforceability of the 1999 deed and 2001 and 2002 affidavits rescinding their signatures. Other children argued that the deed was never fully executed and delivered so it never became effective to convey any interest in the property.
The probate court granted the executor’s motion for summary judgment and determined that the 1999 deed was "valid, effective, and enforceable against the eight grantors who signed" and was unambiguous. On appeal, the appellate court reversed and remanded.
The only issue on appeal was whether the probate court erred in granting the executor’s motion for summary judgment. The defendant children claimed that there was a genuine issue of material fact as to whether the 1999 deed was enforceable because not all of the children had signed it. The appellate court determined that the evidence revealed an oral understanding among the children that the deed required all of their signatures. This created, the appellate court reasoned, a condition precedent that wasn’t inconsistent with the deed. The deed was silent concerning whether all of the children needed to sign or if it would convey an individual interest. Further the deed described the property as a fee simple absolute, and did not describe the individual interest of the children. Since each of the children owned a one tenth interest, the only way for a full fee simple absolute to be transferred was for all of the children to sign the deed. The appellate court determined that the children had proffered sufficient evidence of the oral condition precedent to raise a genuine issue of material fact.
The Delivery Requirement
Not only must a deed be signed, it must be delivered to be effective to pass title. However, intention to deliver is the controlling element in determining whether a purported delivery is effective to transfer the real estate. For example, in Masek v. Estate of Masek, No. A-10-279, 2010 Neb. App. LEXIS 196 (Neb. Ct. App. Dec. 28, 2010), title to farmland was held not to have transferred due to the lack of the transferor’s present intent to deliver the deed. The deed had been executed in 1977, but was not recorded and later discovered in the transferor’s desk upon his death in 2007. Other facts showed that the transferor exercised ownership and control of the farm until he died.
While no particular form of delivery or ceremony is necessary, any event that clearly manifests the grantor's intent to deliver is effective to convey title. Thus, it is not necessary for a physical transfer of the deed to take place if the grantor has the present intent to part with legal control of the property. In other words, if delivery is not accepted, that has no bearing on the transferor’s present intent to deliver the deed. Conversely, a physical transfer of the deed is not effective to convey title if the delivery is not completed with the requisite intent.
Because of the requirement of a present intent to deliver, any conveyance where the grantor intends to withhold from the grantee complete ownership until the performance of some condition or the happening of some event is a conditional delivery and is ineffective to convey the associated real estate. For example, a deed delivered to a third party with instructions to record it upon the grantor's death is ineffective to transfer title. A deed cannot be used to transfer property at death as can a will unless the statutory requirements for an effective will are satisfied. The formalities for deeds and wills are different. As a result, a deed that fails to transfer title because the grantor did not have the present intent to deliver is seldom treated as a valid will even if the grantor's intent would be furthered.
For instance, in Giefer v. Swenton, 23 Kan. App. 2d 172, 928 P.2d 906 (1996), the decedent owned a small farm. His wife had already died, leaving him with their seven adult children – one son and six daughters. In the fall of 1990, the decedent executed a deed to the farm which conveyed a 1/7 interest in it to each of his children as tenants in common. His will was executed the same day. He didn’t physically transfer the deed to the children, instead holding it until early 1993. At that time, he told one of the daughters to record it. About five months later, he executed a second will leaving the farm to all of the children, but it also contained a provision giving the son the absolute right to buy the farm from his sisters for $400 per acre. About three weeks after executing the second will, the decedent died. All of the daughters except one sold their interest in the farm to their brother. This issue in the case was whether the decedent died owning the family farm or deeded it away before his death. In other words, the issue was whether the deed had been properly delivered.
The court determined that the deed had been effectively delivered when it was recorded. That’s the rule in Kansas – recordation constitutes delivery. Manual delivery to the grantee is not necessary. Here, the deed was recorded at the decedent’s express direction. The court also noted that the deed contained no reservations or qualifications, and that it was clear that the decedent knew what he wanted to do about deeding the farm – he did not want to own the farm at the time of his death. That outcome had an impact on the son.
While it may seem simple to transfer real estate, there can be unique sets of facts that can complicate the signing and delivery requirements. In many situations, a well-trained real estate attorney can provide sound advice to help avoid problems that might arise.