Deeds: Underwriting Guidelines

In order for a deed to be valid and enforceable:


1.  The grantor must have been competent at the time of its execution.

2.  The grantee must be adequately identified.

3.  The deed must contain granting or conveyancing language.

4.  The deed must describe the property to a reasonable certainty.

5.  The deed must be properly executed by grantor and spouse, as applicable.

6.  The deed must have delivery and acceptance to and by the grantee.


Each state has statutory formalities that must be observed in conveyances of land lying within its borders. These typically include one or more of the following: proper execution (individual, corporate, etc.); witnesses; and acknowledgment  by a notary or other authorized individual. In addition, a deed must be recorded in the real property records of the county in which the land lies before the interest of the grantee can be insured.


Caution: Beware of possibility of fraud.


As is also discussed in the section on Gift Deeds of this Manual, caution must be exercised when examining title when the chain of title includes deeds, especially quit claim deeds, which appear to stand alone with no new loan transaction showing of record concurrently or just a “stand-alone” deed transferring title. If such a deed, of any type or nature, appears questions should be asked about the reasons for the deed, verification of authenticity and confirmation of the signatures on the deed and if they were voluntary. Experience has shown that sometimes “stand-alone” deeds are shortly (within a few days or weeks) followed by a new loan on the same property. The “stand-alone” deed is subsequently found to be a forgery. Deeds between or among family members (individuals with the same last name), deeds conveying property from one spouse to the other, gift deeds, deeds which show no (or nominal) consideration, and deeds with no acknowledgment (or defective acknowledgment) should be investigated for authenticity. Also handwritten documents which suggest the parties hurriedly completed a form document should be investigated. 


These conditions will not always confirm wrong-doing, and no problem may be discovered in all instances. However, experience has shown that these can be indicators (“red-flags”) of wrong-doing, and the bad transactions can be discovered and good or valid transaction may be confirmed by asking questions of the parties involved (especially the grantors in such deeds) to verify authenticity. Although not the exclusive method for perpetrating frauds, quit claim deeds are more likely to be used in fraudulent schemes. Any time a quit claim deed is the type of document used to vest title in the current seller or mortgagor, questions should be asked to verify authenticity. Vesting title by a quit claim deed is more common in some jurisdictions, but in other states, quit claim deeds are used only as curative instruments. Local practices may govern your scrutiny of quit claim deeds.