Is a Deed a Contract?

The purpose of this article is to explore the finer distinctions between deeds and contracts. In California law, a deed is one of the most powerful legal documents that any person will ever handle, but there is very little in the public domain available about them in order to understand them better. Moreover, unlike other legal documents that may virtually require an attorney in order to be prepared properly, almost any owner of real estate could likely create an effective deed and transfer real estate with very little effort. 

Because deeds are so powerful on the one hand, yet so easy to create on the other, this article seeks to explore some lesser known technical aspects about deeds in order to increase the public’s knowledge about the law. 

What is a deed?

A deed is more formal than a simple contract, and its execution is deemed to be among the most solemn of civil acts. (Tillaux v. Tillaux (1897) 115 Cal. 663.) A deed is a written instrument which conveys or transfers title to real property. (Estate of Stephens (2002) 28 Cal.4th 665, 672.) It is not merely evidence of a grant of the property designated in the deed but is the grant itself. (Hamilton v. Hubbard (1901) 134 Cal. 603.) As a fully executed contract, a deed is subject to the rules of law concerning contracts in general, except that consideration is not necessary for its validity. (Civ. Code § 1040.) 

A deed not supported by consideration is effective to convey title if executed voluntarily with knowledge of its contents and with intent to convey title to the grantee. (Lieman v. Golley (1918) 178 Cal. 544; Cambridge v. Moore (1943) 62 Cal.App.2d 134.) 

How do courts interpret deeds?

The determination of whether a particular instrument is a deed or a contract to convey requires an examination of the language of the instrument as a whole for the purpose of ascertaining the intention of the parties. (Canyon Vineyard Estates I, LLC v. DeJoria (2002) 78 Cal.App.5th 995.) The usual inquiry is whether the language used imports a present conveyance or merely a further assurance to pass title. (Roberts v. Abbott (1920) 48 Cal.App. 779.) 

Technical words of grant are not essential to make an instrument a deed if the intent to transfer title by the instrument is shown by the appropriate words. A deed must contain apt words of grant: that is, words that manifest the grantor’s intention to convey the property by the instrument, as distinguished from an intention to convey it at some future time. (Cordano v. Wright (1911) 159 Cal. 610; Dupont v. Wertheman (1858) 10 Cal. 354.) 

If an intention to pass title is disclosed, the courts will give effect to that intention despite inaccuracy of expression or inaptness of words used. (Carmen v. Athearn (1947) 77 Cal.App.2d 585; Ames v. Irvine Co. (1966) 246 Cal.App.2d 832.) For example, the fact that an instrument is labeled “agreement for a deed” does not necessarily prevent it from constituting a deed. (Wholey v. Cavanaugh (1891) 88 Cal. 132.) 

Conversely, the presence of technical words of conveyance does not necessarily make an instrument a deed if it was not the intention of the parties that it should operate as a deed. (Sepulveda v. Apablasa (1938) 25 Cal.App.2d 381.) 

What is an Executory Contract?

An executed contract is where everything is completed at the time of the agreement. (City of Galt v. Cohen (2017) 12 Cal.App.5th 367, 381–382.) A deed is distinguishable from a contract to convey, in that the such a contract anticipates that transferring title will happen later by a another document. (Stanislaus Water Co. v. Bachman (1908) 152 Cal. 716.) A grant of real property, however, does not require any consideration to be effective. (Greeninger v. Ruelle (1954) 124 Cal.App.2d 8, 9.) 

If a deed is made in conjunction with another contract they can be merged, which is called the doctrine of merger. In merging a contract with a deed, the court looks at whether the contract is consistent with the deed. Merger can also be used where parties clearly intend to have all contractional obligations absorbed by recorded deed. (Ram’s Gate Winery, LLC v. Roche (2015) 235 Cal.App.4th 1071, 1082.)

What is an example?

For example, Shawn wants to convey Julie a home with a deed. Shawn would need the deed to be written out. A deed is a contract under the statute of frauds meaning it must be written down. This means if Shawn verbally promises to give the house to Julie and Julie attempts to enforce that promise it will be ineffective. The deed would need to include the home, specifically stating the deed was giving Julie title to the home. Julie would not need to give consideration for the home unlike a usual contract. Julie would not need to give money or something else of value in exchange for the house. Shawn would sign and notarize the deed. Shawn would then record the deed with the county recorder’s office to ensure he is properly giving notice to anyone who might have an interest in the property. This also ensures Julie’s interest in the home has priority and legitimacy. Once the deed has been given to Julie it is binding and enforceable in court as an executed contract.

If Shawn and Julie were previously business partners and had an old contract including prior business dealings and the intent to transfer the title to Julie that contract could be merged into the deed when it is created. The business dealings are no longer relevant, and the deed would absorb the remaining contractual obligations of Shawn giving the house to Julie. 

Conclusion

The Underwood Law Firm has a team of experienced lawyers who can help resolve your property interest disputes at trial and help you pursue solutions like partition actions. We are here to help.