Conveying 1031 Exchange Property with a Deed

What are the essential elements of a deed? The main document of transfer in a 1031 Tax Exchange real estate transaction is a deed. The essential elements of a deed are its form and content, delivery and acceptance, and recording.

Form and Content:

For a deed to be enforceable by law it must be in writing. The grantor, or conveyor of the deed, must be competent and legally able to transfer the deed (must be of legal age and legally sane). The deed must contain words of conveyance such as, “Grants to….”, describing the objective of the deed. The grantee must also be legally capable of acquiring title to the property (same rules as for grantor, although less strict, minors can acquire title without a guardian). The deed must contain the legal description of the property. The grantor must execute the deed by signing it over to the grantee.

Delivery and Acceptance:

In order to transfer title, delivery and acceptance are essential. Physical possession of the deed by the grantee both implies and is evidence of delivery. If the grantor still holds possession of the deed it is considered to have not been delivered. The deed being recorded also is evidence of delivery.

Recording:

Once the contract contains the necessary form, content and is delivered, it must be recorded for the parties rights to be protected. Recording the document with the proper governing authority (county, city, etc.) confirms the existence of the contract. The recording of a contract can also trigger certain tax requirements.