The Constant Fear of “Rejection” When Drafting Real Estate Deeds

/ June 25, 2014

Mortgage contract - iStockWhen drafting real estate deeds (even though the Minnesota Uniform Conveyancing Blanks forms look relatively simple) there are several statutory-specific rules that inevitably lead to the return of your deed with a “rejection letter” from the county recorder.

Here are some of the common mistakes made when drafting real estate deeds:

Marital Status Omitted

You must list each Grantor’s marital status. In some counties, you have to go one step further. You must indicate who the Grantors are married to. A married person is not specific enough on a transfer document. So, the remedy is: “John Smith and Jane Smith, married to each other” or “John Smith and Jane Smith, husband and wife.”

Separate Checks (for Recording Fees, Mortgage Registration/Deed Tax/Agricultural Preservation and Torrens Examiner)

When recording a deed, you may need to write three separate checks; one check to the Recorder’s office, one check to the Treasurer and one check to the Torrens Examiner. Currently, the recording fee is $46.00 per document. Deed tax is calculated based on the total amount of consideration for the conveyance and mortgage tax is imposed when recording a mortgage. Please see Hennepin County’s Mortgage/Deed Tax Calculator to calculate the total amount of tax. Some counties also require a $5.00 agricultural fee. Usually you can combine the agricultural fee with the deed/mortgage tax; however, you should call the Recorder’s office to verify the same and avoid the “rejection.” The issuance of separate checks could also depend on whether the property is Abstract or Torrens. Here is a list of known Minnesota counties that require the additional $5.00 agricultural fee (when paying deed or mortgage tax):

  • Anoka
  • Carver
  • Dakota
  • Hennepin
  • Ramsey
  • Scott
  • Waseca
  • Washington
  • Winona
  • Wright

Matching Names

You must list the Grantor’s name exactly as used when the Grantor originally took title. For example, if the Grantor originally took title as Doug, you could not use Douglas when conveying title to a Grantee. If the Grantor’s legal name is Douglas, you would have to use “a/k/a Doug” to remove and replace Doug with Douglas in the tax records. (ie. Douglas a/k/a Doug).

Other Common Errors

  • Notary Acknowledgment Issues: missing county, missing notary signature, missing date, or notary stamp
  • Drafting Statement: you must list the name and address of the person drafting the deed. In Minnesota, deeds do not need to be drafted by an attorney.

Estate Planning & Divorce

If there is real property involved in a divorce proceeding, and neither party is represented by an attorney, an attorney should always review the disposition of real property. This will ensure a clear chain of title. Upon the entry of the divorce decree, the former spouse’s marital interest must be divested, whether or not his or her name was on the title. Sometimes this issue isn’t raised until someone sits down to create their estate plan.

For example, Sam owns a home. Sam meets Joe and they marry. Joe’s name is never added to the title. Sam and Joe divorce. In order to divest Joe of his marital interest in the property, he must somehow convey his interest in the property. This may be accomplished by the recording of a quit claim deed, summary real estate disposition judgment, or divorce decree in the county where the property is located. The last option only works if the language in the divorce decree legally divested spouse of his or her interest. The “do-it-yourself” Minnesota divorce decree forms are not usually specific enough to meet this requirement and an attorney should always review the property disposition.

So, what happens if you don’t legally divest your former spouse of their interest and then you later realize this when creating your estate plan? First, this issue is often caught in the county taxation department and you will be forced to contact your former spouse. Then, you both will need to execute the appropriate documents to divest the ex-spouse of his or her interest. Even if the county never catches this issue, the issue is almost guaranteed to arise when you try and sell the property.

If your former spouse is dead or remarried, this creates an even more complex problem. If your former spouse is dead, the deceased’s personal representative will likely have to act on behalf of your former spouse. If your former spouse is remarried, you will also need to divest the new spouse of his or her interest in your former spouse’s interest in said property. As you see, this gets very complicated, very quickly. Moral of the story: if both parties are not represented by an attorney, the current owner of the real property should consult with an attorney and ensure the property continues to maintain “marketable title.”

Other Divorce Specific Issues

  • You need to have a typed sentence on the deed stating: “the total consideration for this transfer of property is less than $500.00.” This relates to the deed tax issue.
  • You need to cite the appropriate statute and exemption if there is no deed tax required. For example, there is no deed tax if the transfer is pursuant to a divorce. (See Minn. Stat. § 287.22 (14)).

This is only a small list of issues to consider when drafting real estate deeds. For more information, contact an attorney in your area.

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