Legal Descriptions and Deeds: Everything You Need to Know for the New Jersey Real Estate Exam

January 22, 2022

A deed is an instrument that conveys title to real property. A legal description is an exact way of describing real estate.

Land can be described by three methods: by metes and bounds, by government survey, or by reference to a plat (map) filed in the county clerk's office in the county where the land is located.

Legal descriptions should not be changed, altered, or combined without adequate information from a competent authority. Legal descriptions should always include the name of the county and state in which the land is located.

Street addresses and property tax account identification numbers are not usually acceptable as legal descriptions.

What are legal land descriptions?

Legal land descriptions are used when transferring title from one person to another. The legal description must be clear enough to identify the land and transfer ownership without question.

Deeds transfer property from one party to another.

One of the essentials of a deed is an adequate description of the land being transferred. An error in the legal description of the property has consequences that can affect taxes, expensive lawsuits, or possibly loss of the property via lawsuit if other parties try to enforce a claim.

The most common legal land description is called "metes and bounds," followed by the government survey system (sometimes called the rectangular survey system) and plat maps, also referred to as recorded plats of subdivision.

 

Why does the legal description on a deed matter?

If the description is incorrect, it may cause problems later if someone tries to sell the property or if a lender is trying to aid in refinancing or wants to foreclose on the property.

 

For example, if the deed says "a certain parcel of land lying in the County of __________, State of ___________, bounded and described as follows:" but the actual boundaries are different from what was stated in the deed, then the seller will likely lose money if he sells the property at a price based on the erroneous boundaries.

The most common legal land descriptions are metes and bounds, government survey (also called rectangular survey, and plats. Metes and bounds describes land using coordinates or boundaries of the property. Government surveys are done by a surveyor who operates a chain and compass to measure distances between points on the ground Plats are maps that show lots, blocks, streets, etc., on the ground.

 

Three Types of Legal Descriptions

In New Jersey, the rectangular survey system is not used but is still briefly mentioned on the exam, so we cover it here.

 

Rectangular Survey System aka Government Survey System

What is the government survey system land description?

The United States uses a government survey system for most of its land. This method was developed during the 19th century to simplify land descriptions. It involves dividing each state into sections called townships, which are then divided into smaller units called sections.

This looks like a basic grid system. We start with a line down the middle going north to south and another going east to west.

That gives us reference points to start identifying spots on the map. We can say it's in the top left corner and have a general idea of the area in question. However, we mentioned earlier that property descriptions need to be exact, so we need to go into more detail.

 To be specific, we have to add more lines to the grid system. Instead of saying it's in the top left corner, now we can say it's three squares to the left and five squares up from the middle. That narrows down the areas significantly. 

More lines added to the grid make it easy to describe specific property locations.

That's how the government survey system works. It was initially established in the 19th century to identify land in sparsely developed areas. 

The first two main lines are called the baseline (east to west) and the principal meridian (north to south.)

Their intersecting point in the middle is called the fixed point of beginning since that's where the other lines all reference.

When more lines are added to the grid, they're added every 6 miles. Going north to south, they're called range lines. Running East to West, they're called tiers. 

Since they're all 6 miles apart, they create squares called townships that are 6 miles on each side.

That means each township has 36 square miles of land. The next step is to divide those townships into sections because a 36 square mile area is still not specific enough to ID a parcel.

So each section is a one-mile square within the township. There are 36 sections within each township. 

Now that we've got that out of the way, let's move on to the more commonly used systems in New Jersey. 

 

Metes and Bounds

A metes-and-bounds description starts at a designated point called the point of beginning (POB). From there, it proceeds clockwise around the property's boundaries, returning to the POB.

 A metes-and-bounds description always ends at the point where it began (the POB).

In a metes-and-bounds description, monuments are fixed objects used to establish real estate boundaries.

Today, man-made markers are the more common monuments because it is recognized that natural objects may change or be removed.

 

Recorded Plat of Subdivision

A recorded subdivision plat contains a detailed map of a tract of land, showing streets, blocks, and lots of the subdivision.When you go to look up property tax records you'll see the block and lot on each property listing after searching by county, and then by municipality. 

The lots are assigned numbers, and their sizes will be indicated on the map. 

The plat must be recorded in the appropriate county recorder's office before the sale of any lot. If you've looked at a sample NJ real estate sales contract, you've seen the indicators of a property's block and lot, followed by the county and municipality the property sits in. That gives everyone concerned several ways to identify the property rather than just the street address.

 

Preparing Surveys and the Duties of a Surveyor

A surveyor is a professional who prepares surveys and maps that show the location of buildings, roads, and other features on land.

Surveys are conducted to determine the boundaries of properties, locate utilities, and prepare plats for recording.

When a surveyor prepares a subdivision plot, elevations must be considered since condos rise vertically. A surveyor describes a condominiums unit by unit, describing the height of each floor and ceilings above the city datum. 

Surveyors may also use benchmarks to base measurements on Benchmarks are physical structures that mark a distance from a known point.

Benchmarks are placed at intervals along a road or railroad track. They help surveyors measure distances accurately.

We said that legal property descriptions are essential and are a critical requirement for a deed to be valid. Now that we've covered the three methods to describe the property legally let's move on to deeds. 

 

What you Need to Know About Deeds for the Real Estate Exam 

A deed is an instrument that transfers title to real property, and the legal document that transfers ownership of the property All deeds must be in writing. 

The owner is known as the grantor, while the person receiving the deed is known as the grantee. 

The grantor must sign the deed, and while the grantee should sign, it's not required. 

You can think of the deed as the vehicle that takes ownership from one party to another. 

If title to real estate is ownership, you can picture it getting a ride from the deed to closing. When the grantor signs the deed and gives it to the grantee, the transfer is complete, and the title has transferred. 

There are four common types of deeds used in New Jersey. Each type is used for different purposes and has specific benefits.

 

Warranty Deed

 This type of deed offers the most protection of any deed. The grantor is legally bound by certain covenants or warranties. These are also sometimes called special warranty deeds. The basic guarantees (covenants) are:

Covenant of seisin

The grantor warrants that they are the property owner and have the right to convey title to it. If this covenant is broken, the grantee may recover damages up to the total purchase price.

Covenant against encumbrances

The grantor warrants that there are no liens or encumbrances except for any specified in this deed. If this covenant is breached, then the grantee could sue the grantor for any damage caused by the breach, and if necessary, they would be required to pay to clear up the encumbrance.

This means that the buyer can rest assured they won't have to worry about any liens since the seller will have to pay for them to be cleared. 

Covenant of quiet enjoyment

The grantor guarantees that the grantee's title is good against third parties who might bring court actions to establish superior title to the property. This means that the grantee will have peace of mind knowing that their title is secure.

Covenant of further assurance

The grantor promises to obtain and deliver any instrument needed to make the title good. This means that if the grantee needs anything else to prove the title is good, such as a survey, a certificate of occupancy, etc., the grantor will get it done.

Covenant of warranty forever

The grantor guarantees that if the title fails at any time in the future, the title fails, they will compensate the grantee for the loss sustained.

These covenants in a warranty deed are not limited to matters that occurred during the time the grantor owned the property; they extend back to all previous owners. For that reason, this is sometimes called a general warranty deed, meaning it offers a general warranty that covers everything for all time up to the transfer. 

 

Bargain and Sale Deed With Covenants Against Grantor's Acts

A bargain and sale deed with covenants against the grantor's acts is similar to a warranty deed. Instead of offering a general warranty, it contains specific covenants that apply only when the seller owned the property.

This deed says they can vouch for the time they owned the property but won't guarantee there weren't any issues prior. 

This is the standard deed used in residential sales in New Jersey.

 

Bargain and Sale Deed

A straight bargain and sale deed doesn't contain any express warranties but does imply that the grantor holds title to the property. If there are title defects later, the grantee has very little recourse. 

This type of deed is usually used in foreclosure sales and tax sales.

 

Quit Claim Deed

What Are The Limitations Of A Quitclaim Deed?

A quitclaim deed provides the grantee with the least protection of any deed It carries no covenants or warranties and conveys only such interest as the grantor may have.

If the grantor has no interest in the property, the grantee acquires nothing. 

A quitclaim deed is used for simple transfers within a family, sometimes in divorce. It's often used to clear the title of a property before selling it.

 

Requirements for a Valid Conveyance

 Not all deeds are created equal, but certain basic requirements for conveyance are standard in most states. 

They are: 

  • a grantor having the legal capacity to execute (sign) the deed;
  • a grantee named with reasonable certainty, so that they can be identified;
  • a recital of consideration;
  • a granting clause (words of conveyance);
  • designation of any limitations on the conveyance of a full fee simple estate;
  • an adequate description of the property conveyed;
  • exceptions and reservations affecting the title;
  • the signature of the grantor; and
  • delivery of the deed and acceptance by the grantee to pass title.

Finally, the last one, and one of the most likely to show up on the real estate exam, a deed does not have to be dated to be valid.  

 

Grantors, Grantees, and the details of a Deed

To be valid, a deed must name a grantee so they're readily identifiable. Next, the deed must contain a clause acknowledging the grantor has received something as valuable consideration for the sale. 

Next, a granting clause is required. This states the grantor's intention to convey the property. A habendum clause will define the ownership to be transferred to the grantee when necessary. 

As mentioned prior, the deed also has to contain an adequate legal description of the property being transferred. If there are any exceptions or reservations, like a grantor reserving an easement for themselves, they would be written into the deed, or another document containing the reservations could be cited. 

 

The Requirement of a Grantor's Signature, Acknowledgement, and Delivery and Acceptance

To be valid, all deeds must be signed by all the grantor's named in the deed Evidence that the grantor is alive is required if power of attorney is used to sign on behalf of the grantor.

An acknowledgment will confirm that the grantor's signature is valid. An acknowledgment is a declaration made by a person signing a document before a notary public or authorized public officer. This proves the signature is genuine. 

Finally, there must be delivery and acceptance. The grantor must deliver the deed, and the grantee must accept Title (ownership) passes when the deed is delivered. Remember, the deed does not have to be dated.

 

A final note on the execution of corporate deeds

A corporation is defined as a legal entity. When corporations sell real estate, they must follow three key regulations.

  1. Only with a formal decision passed by the board of directors can a corporation sell property.
  2. If a substantial amount of a corporation's real estate is being sold, it must also obtain a resolution from the stockholders authorizing the transaction.
  3. Only an authorized representative can sign deeds to real estate. The officer's power must be approved by a board of directors resolution.

Note: The corporate seal is not required to be affixed to the instrument unless the acknowledgment uses it.

We've outlined the basics for you here regarding legal descriptions of property and deeds in real estate. If you know this material inside and out, you'll have everything you need for the New Jersey real estate exam when it comes to deeds and legal descriptions of property.

If you need more information or help preparing for the test, we're happy to help.

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