What Constitutes an Illegal Deed Transfer?

The delivery requirement for deeds does not refer to physical delivery. Rather, a seller delivers a deed when he manifests a clear intent that ownership of the property should permanently pass to the buyer. This intent can be shown either by the seller’s spoken or written words, or by conduct. Any deed transfer made without this intent is not legal delivery, and the deed will not be recognized by the law.

The law recognizes numerous valid methods of delivery, so long as they display the requisite seller’s intent. The easiest form of delivery is physical transfer from the seller to the buyer. However, in the modern era, delivery is often made using the services of an escrow agent. In escrow, the seller delivers the deed to a third party, who then holds the deed until all conditions of the sale have been fulfilled.

Most states hold that certain forms of transfer create the legal presumption of valid delivery. These forms include physical transfer from seller to buyer; official recording of the deed; the buyer’s physical possession of a fully executed deed; and seller’s acknowledgment of delivery before a notary public. A party who wishes to challenge the deed can undermine these presumptions with evidence that the seller did not have the required intent.

Conditional delivery of a deed occurs when the seller transfers the deed to the buyer but attaches conditions to the completion of delivery. Because the presence of conditions seems to undermine the seller’s intent for the deed to take immediate effect, many states limit the situations in which conditional delivery is acceptable. Some jurisdictions allow a seller to deliver a deed, with the attached condition that the deed will not become operative until the seller’s death. However, in many situations, a conditionally delivered deed will constitute an illegal delivery unless the seller’s intent can be proved.

A court may find a deed delivery illegal in any situation in which there is evidence that the seller did not have immediate intent to transfer ownership of the property. Such evidence includes that of seller hesitation or uncertainty. For instance, in conditional delivery situations, if the grantor should ask the buyer to return the deed before all conditions have been met (thus before delivery is complete), this can undermine any legal intent he may have had when he originally transferred the deed. Any time the seller does not intend immediate and irrevocable transfer of property upon completion of delivery, the delivery may be illegal.