Requirements for a Valid Deed
The following are the minimum requirements for a valid deed in Illinois:
- Grantor, who has the legal capacity to execute (sign) the deed
- Grantee named with reasonable certainty to be identified
- Recital of consideration
- Granting clause (words of conveyance, together with any words of limitation)
- Accurate legal description of the property conveyed
- Any relevant exceptions or reservations
- Signature of the grantor, sometimes with a seal, witness, or acknowledgment
- Delivery of the deed and acceptance by the grantee to pass title
Habendum clause defines ownership taken by the grantee. The habendum clause begins with the words to have and to hold. Its provisions must agree with those stated in the granting clause. If there is a discrepancy, the granting clause prevails.
Grantor A grantor must be of lawful age, at least 18 years old. A deed executed by a minor is usually voidable.
A grantor also must be of sound mind. Generally, any grantor who can understand the action is viewed as mentally capable of executing a valid deed. A deed executed by someone who was mentally impaired at the time is voidable but not automatically void. If, however, the grantor has been judged legally incompetent, the deed will be void. Real estate owned by someone who is legally incompetent can be conveyed only with a court’s approval.
The grantor’s name must be spelled correctly and consistently throughout the deed. If the grantor’s name has been changed since the title was acquired, as when a person changes her name by marriage, both names should be shown —for example, “Mary Smith, formerly Mary Jones.”
Grantee To be valid, a deed must name a grantee. The grantee must be specifically named so that the person to whom the property is being conveyed can be readily identified from the deed itself. However, the grantee (new owner) is not required to sign the deed.
If more than one grantee is involved, the granting clause should specify their rights in the property. The clause might state, for instance, that the grantees will take title as “joint tenants,” “tenants in common,” or “tenants by the entirety.” This is especially important when specific wording is necessary to create a joint tenancy or tenancy by the entirety.
The purchaser’s or grantee’s present address is required in Illinois as an element of a valid deed. Also, if no specific form of ownership is selected, tenancy in common is assumed in Illinois. One can determine, then, how ownership is held by consulting the deed language.
Consideration A valid deed must contain a clause acknowledging that the grantor has received consideration, however the actual selling price is never contained in the deed. Generally, the amount of consideration is stated in dollars. When a deed conveys real estate as a gift to a relative, “love and affection” may be sufficient consideration. In most states, however, it is customary to recite at least a nominal consideration, such as “$10 and other good and valuable consideration.”
Granting clause (words of conveyance) A deed must contain a granting clause that states the grantor’s intention to convey the property. Depending on the type of deed and the obligations agreed to by the grantor (discussed later in this chapter), the wording would be similar to one of the following:
- “I, Kent Long, convey and warrant .” (creates a warranty deed)
- “I, Kent Long, remise, release, alienate, and convey. . .” (creates a special warranty deed)
- “I, Kent Long, grant, bargain, and sell . . .” (creates a bargain and sale deed)
- “I, Kent Long, remise, release, and quitclaim . .” (creates a quitclaim deed)
A deed that conveys the grantor’s entire fee simple absolute interest usually contains wording such as “to ABC and to her heirs and assigns forever.” If the grantor conveys less than her complete interest, such as a life estate, the wording must indicate this limitation—for example, “to ABC for the duration of her natural life.”
Legal description of real estate To be valid, a deed must contain an accurate legal description of the real estate conveyed. Land is considered adequately described if a competent surveyor can locate the property using the description.
Exceptions and reservations A valid deed must specifically note any encumbrances, reservations, or limitations that affect the title being conveyed. This might include such things as restrictions and easements that run with the land. In addition to citing existing encumbrances, a grantor may reserve some right to the land, such as an easement, for the grantor’s use. A grantor may also place certain restrictions on a grantee’s use of the property. Developers often restrict the number of houses that may be built on each lot in a subdivision. Such private restrictions must be stated in the deed or contained in a previously recorded document, such as the sub-divider’s master deed, that is expressly referred to in the deed. Many of these deed restrictions have time limits and often include renewal clauses.
Signature of grantor To be valid, a deed must be signed by all grantors named in the deed.
Most states permit an attorney-in-fact to sign for a grantor. The attorney-in-fact must act under a power of attorney, the specific written authority to execute and sign one or more legal instruments for another person.
Acknowledgment/notarization An acknowledgment (also called notarization) is a formal declaration that the person who signs a written document does so voluntarily and that her signature is genuine.
In Illinois, acknowledgment/notarization is not essential to the validity of the deed. However, unless the deed is acknowledged, it may not be introduced as evidence in a court of law without some further proof of its execution. As a result, it is customary that virtually all documents conveying title are acknowledged/notarized.
Delivery and acceptance A title is not considered transferred until the deed is actually delivered to and accepted by the grantee. The grantor may deliver the deed to the grantee either personally or through a third party. In an arm’s-length transaction, the title must be delivered during the grantor’s lifetime and accepted during the grantee’s lifetime. The effective date of the transfer of title from the grantor to the grantee is the date of delivery of the deed itself. When a deed is delivered in escrow, the date of delivery generally relates back to the date of deposit with the escrow agent.
Execution of Corporate Deeds
The laws governing a corporation’s right to convey real estate vary from state to state. However, two basic rules must be followed:
- A corporation can convey real estate only by authority granted in its bylaws or upon resolution passed by its board of directors. If all or a substantial portion of a corporation’s real estate is being conveyed, a resolution authorizing the sale must usually be secured from the shareholders.
- Deeds to corporate real estate can be signed only by an authorized officer.
