Voluntary Transfer of Property Basics for the Real Estate License Exam
Real Estate License Exam questions about transfer of property tend to be definitional, using short cases to get the right answers out of you. Most of the time, title to property, or the ownership of it, is conveyed or transferred voluntarily from one owner to another, which is a transaction formally known as voluntary alienation. This kind of transfer can be accomplished as dedications, gifts, public grants, and sales.
Real estate dedication
Dedication is a term used for a specific type of voluntary transfer of property from an individual to the government. You may well ask why anyone would want to voluntarily give their property to the government. Dedication typically refers to the process by which a developer transfers ownership of the lands that are needed for roads, sewers, waterlines, and other utilities to the government as part of a land development.
A person who subdivides a large piece of property into smaller residential lots for sale may build the roads as the individual lots are sold. At some point, the developer turns over title to the government, creating a public street.
Dedications may also include easements that the municipality may need, such as for getting to a drainage ditch for maintenance. Individual property owners (as opposed to developers) can also dedicate land to a municipality, such as land for a road to allow access to a town park.
Governments vary in the way they view and treat this type of dedication. They often decide how to deal with dedications on a project-by-project basis. A local government may require a subdivision street to be dedicated, but prefer the internal roads of a condominium development to remain privately owned so it (the government) is not responsible for maintenance.
Although not technically viewed as a gift, generally no consideration, or thing of value, is given by the government in return for the dedicated land.
Real estate as gifts
You know what a gift is, right? Think about Christmas and your birthday. Property can be conveyed simply by giving it to someone. A deed is executed to convey title, but the main difference in a gift situation is that no money or other thing of value, usually called the consideration, is exchanged for the property. In all other respects, the conveyance by deed is the same.
Public grants and real estate
Public grants — sometimes simply called grants — are transfers of property in which the government gives a piece of property to someone. In years past, when the federal government wanted to settle a new part of the country, it simply gave grants of land to people who agreed to settle in that location.
Some of your ancestors may have received grants, or else you may be living on a piece of property that once was part of a public grant.
Real estate sales
Representing someone in the sale or purchase of a property is, of course, where you make your money as a real estate agent. A sale typically involves a grantor (the person selling the property), a grantee (the person buying the property), and a deed (the document that transfers title).
One important concept in a deed for a sale of property is the consideration. The exchange of money or something else of value in exchange for the property characterizes a conveyance of property as a sale rather than something else, such as a gift.