THE DEED DICTIONARY

MARKETABLE TITLE

Good or clear title reasonably free from risk of litigation over

possible defects; also referred to as merchantable title. Marketable title need not, however, be perfect title. Rather, it is a title not subject to such reasonable doubt as would create a just apprehension of invalidity in the mind of a person of reasonable prudence and intelligence.

MECHANIC'S LIEN

A statutory lien created in favor of any person or association of persons who furnish labor or materials in the improvement, repair or maintenance of real property to secure payment for the materials supplied or labor and services rendered. (See HRS § 507-42.) This right did not exist in common law.

MESNE CONVEYANCE

An intermediate or middle conveyance; any conveyance between the first or initial conveyance and the most recent conveyance in the chain of title.

METES AND BOUNDS

A common method of land description that identifies a property by specifying the shape and boundary dimensions of the parcel, using terminal points and angles. A metes and bounds description starts at a well-marked point of beginning and follows the boundaries of the land by courses and metes (measures, distances and compass direction) and bounds (landmarks, monuments) and returns to the true point of beginning. A description which fails to enclose an area by returning to the point of beginning is defective. The general rule is that in case of variations between courses and distances and monuments, the monuments prevail. This is because errors are more likely to be made with respect to measurements than visible objects. However, the rule is not absolute and is less likely to be applied where the monument is an artificial one, such as a pin placed by, a surveyor, than where the monument is a natural or permanent one.

NOTE: In Hawaii, attorneys do not ordinarily check a metes and bounds description to see if the lot "closes," but if an attorney notices that a description does not close, e.g., only three sides of a square are described, steps should be taken to correct the problem.

MORTGAGE

A written instrument under the terms of which a property owner ("mortgagor") pledges real property to secure payment of a debt owed to another ("mortgagee"). Hawaii is a "lien theory" state, viewing the mortgage as merely granting a lien on the property to the mortgagee, whereas "title theory" states view the mortgage as an actual conveyance of the property to the mortgagee, subject to defeasance. HRS ch. 506 concerns mortgages of real property. Particular attention should be devoted to HRS § 506-1(b) concerning the priority of advances secured by a mortgage.

NOTARY PUBLIC

A public officer whose function is to administer oaths, to attest and certify documents by the officer's signature and official seal, giving them credit and authenticity, to take acknowledgments of deeds and other conveyances, and to perform certain official acts, such as protesting rates and bills. In the absence of a seal, the notarization is void. One who has a beneficial interest (e.g., a grantee or mortgagee) in the subject matter of the instrument being notarized cannot act as a notary public to the document.

NOTICE OF PENDENCY OF ACTION

See LIS PENDENS

PASH DECISION

The Hawaii Supreme Court decision in Public Access Shoreline Hawaii v. Hawaii County Planning Commission, 79 Hawaii 425, 903 P.2d 1246 (1995). In the case, the Court concluded that "the issuance of the Hawaiian land patent confirmed a limited property interest as compared with typical land patents governed by western concepts of property" since "Native Hawaiians retain rights with regard to undeveloped land to pursue traditional activities" (emphasis added). The decision has raised many unanswered questions relating to how traditional western private property rights, including the right to exclude others from one's property, can co-exist with the exercise of traditional and customary rights of Native Hawaiians. Such rights include practices related to subsistence, cultural and religious purposes, access, water and gathering rights.

The Court has provided some clarification of the PASH decision in a subsequent case, State of Hawaii v. Hanapi, 89 Hawaii 177, 970 P.2d 485 (1998), by holding that "if property is deemed 'fully developed,' i.e., lands zoned and used for residential purposes with existing dwellings, improvements and infrastructure, it is always 'inconsistent' to permit the practice of traditional and customary native Hawaiian rights on such property."

POINT OF BEGINNING

The starting point in a metes and bounds description of property, which is usually a street intersection or a specific monument. To effectively complete a legal description of a property, the description must always return to the point of beginning, in order to enclose the described area.

POWER OF ATTORNEY

A written instrument which authorizes the person named therein (the attorney-in-fact) to act in the place of the person executing the instrument. A power of attorney may be general or special. A special power of attorney limits the authority of the attorney-in-fact to performing only the acts listed in the power. If a special power of attorney is to authorize the attorney-in-fact to conduct transactions with respect to real property, a full legal description of the property must be attached to the power. A general power of attorney authorizes the attorney-in-fact to perform any and all acts that the principal might perform, including conducting real property transactions. If the attorney-in-fact is to conduct real property transactions, the power of attorney must be recorded as appropriate. HRS §§ 501-174 and 502-84. Death, disability or incompetence of the principal executing a power of attorney revokes or terminates the power whether or not the attorney-in-fact has actual knowledge of the death, disability or incompetence. A so-called "durable" power of attorney can be prepared to avoid revocation or termination of the power by disability or incompetence by inserting in the power words such as, "This power of attorney shall not be affected by disability of the principal." HRS ch. 551p. (See Chapter 4J for forms and comments.)

PRELIMINARY REPORT

A report issued by a title insurance company that reflects the state of title to a particular piece of real property at a particular moment in time. The report reflects (a) date of the title search, (b) estate or interest covered, (c) vesting of the estate or interest, (d) description of the property reported upon, and (e) exceptions affecting the title as determined by an examination of public records. A preliminary report is commonly furnished to the escrow in a sale or loan transaction for use by the parties as a prelude to consummating the escrow and "preliminarily" to the issuance of a title insurance policy. (See Chapter 5 for forms and comments.)

PROPRIETARY LEASE

A written lease of an apartment in a cooperative apartment building between the owner-corporation and the tenant-stockholder, in which the tenant is given the right to occupy a particular apartment unit. (See COOPERATIVE OWNERSHIP.)

PURCHASE MONEY MORTGAGE

Technically, any mortgage executed by a purchaser of specific real property, contemporaneously with the acquisition of such property, which secures the repayment of money used to purchase the property. However, the term is more usually applied to a mortgage taken by a seller from a purchaser in lieu of purchase money. It may or may not be a first mortgage, but it will have priority over all liens with which the purchaser may have attempted to encumber the property prior to taking title (such as an "after acquired property" clause in an existing mortgage which extends the lien of that mortgage to future property acquired by the borrower), or general liens (such as judgments) which would attach to the property upon delivery of the conveyance to the purchaser. Some states (e.g., California) prohibit deficiency judgments upon foreclosure of purchase money mortgages, but Hawaii does not. (See Chapter 7 for detailed discussion.)

QUITCLAIM DEED

A deed that operates, in effect, as a release of whatever interest the grantor has in the property; sometimes called a release deed. The grantee takes title to the property "as is." The quitclaim deed contains language similar to that found in a "normal" deed, with the important exception that rather than using words of "grant and convey," it contains language such as "remise, release, and quitclaim." Also, a quitclaim deed does not contain any warranties. The grantor therefore does not warrant title or possession and only passes whatever interest the grantor may have, "if any." In effect, the grantor forever quits whatever claim the grantor has in the property and the deed effectively forecloses the claim, if in fact any existed.

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The quitclaim deed transfers only whatever right, title and interest the grantor had in the land at the time of the execution of the deed and does not pass to the grantee any title or interest subsequently acquired by the grantor. Thus, the grantee cannot claim a right to any after-acquired title.

RECORDING

The act of entering into the public records the written instruments affecting the title to real property, such as deeds, mortgages, contracts of sale, options, assignments, and the like.

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Under Hawaii's recording statute (HRS § 502-83), all deeds, leases for a term of more than one year, mortgages of any interest in real estate, or other conveyances of real estate within the state "shall be" recorded in the Bureau of Conveyances. This statute was designed to encourage all persons having an interest in real property to disclose that interest in the public records, thereby protecting others dealing with the property from secret, unrecorded deeds and mortgages. (Prior to the enactment of Recording Acts, the common law rule gave priority to the transferee prior in time.)

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Proper recordation imparts constructive notice to all the world of the existence of the recorded document and its contents, and it protects the grantee in the event that the deed is altered or lost. Further, the act of recordation raises a presumption (rebuttable) that the instrument has been validly delivered, and that it is authentic.

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Any conveyance not properly recorded is void as against any subsequent purchaser, lessee, or mortgagee who, in good faith and for a valuable consideration, without having actual notice of the unrecorded conveyance, records a subsequent interest in the property first. HRS § 502-83. Hawaii's recording statute is, thus, a so-called "race-notice" statute. By way of contrast, the Land Court System is "pure race," where even actual notice of a prior conveyance will not defeat the grantee who records first. HRS § 501-101. The act of recordation only protects subsequent purchasers for value and not donees or beneficiaries under a will, nor does recording protect against interests which arise by operation of law rather than by recordable document, such as dower rights, prescriptive and implied easements and title by adverse possession. (In the case of adverse possession, however, the adverse possessor's physical possession of the property would have provided constructive notice to the subsequent purchaser of the possessor's interest in the property and thus the subsequent purchaser would not be in "good faith.") Failure to record a document, however, does not impair its validity as between the parties thereto and all other parties having notice of its existence.

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Real property tax liens and special assessment liens need not be recorded, since they are considered to be matters of public record. Other tax liens, such as for income tax and payroll tax, must be recorded in the Bureau of Conveyances in order to take priority over subsequently recorded interests. (See HRS § 231-33(c)(1).) Thus, the system of recording creates a hierarchy of claims against a property with priority to be determined by the order in which the claims are recorded. Except for certain governmental liens which automatically take first priority, the order of recorded priority will not be disturbed absent a subordination or recordation of a release.

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When the document affects registered property, it must be registered in the Land Court System; all other documents should be recorded in the "Regular System" at the Bureau of Conveyances. There is no county recording system and therefore documents affecting property on any of the islands must be recorded in the Bureau of Conveyances located in Honolulu. The requirements for recording documents in the Regular System are generally less stringent than under the Land Court System (e.g., parties usually must use their full first and middle names and cannot use their initials on Land Court documents).

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Under both systems, the documents must be signed and properly acknowledged before being recorded. Strict rules apply to the form of the documents; e.g., all changes must be initialed by the notary (or if the document is not executed in Hawaii, initialed by the notary public or the parties to the document) and all insertions and signatures must be in ink that will reproduce legibly under photographic or electrostatic methods. (The requirement that the ink reproduce led to the local practice that documents be signed in black ink.) The grantee's marital status and address must appear on all deeds (HRS § 502-34). The top left-hand portion of the first page of the document must contain the name and address of the person to whom the document should be sent after recording. Only documents in English or Hawaiian are acceptable for recordation; i.e., a deed in Japanese would have to be translated before it would be acceptable for recording. Documents such as assignments or satisfactions of mortgage must contain the book and page number or document number of the mortgage (HRS § 502-33).

A conveyance document will not be accepted for recordation unless it is accompanied by a conveyance tax certificate and the tax, if any, has been paid. After the document has been recorded, it is copied and the original is then returned to the person indicated on the document.

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The reproduced document formerly was placed in the appropriate record book that corresponds to the liber number. The Bureau now maintains microfiche and, more recently, digitally scanned copies of documents. Anyone can examine any recorded document; all he or she needs to know is the book and page number or document number, which can be easily ascertained by use of the grantor-grantee indexes available at the Bureau of Conveyances.

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In 2009, Hawaii enacted the-Uniform Real Property Electronic Recording Act (HRS §§ 502-121 to 502-125), which allows the Bureau. to accept electronic documents with electronic signatures for recordation. Procedures are currently being developed to determine the requirements for the delivery of electronic documents for recording.

REGULAR SYSTEM

A system for recording documents affecting land not registered in the Land Court System; also known as the "unregistered system" or the "grantor-grantee system". Regular System documents are recorded at the Bureau of Conveyances. Requirements for recordation in the Regular System are less stringent than in the Land Court System.

RESERVATION

Used with respect to a conveyance of an interest in real property, a reservation is a provision in the conveyance by which the grantor creates, for the benefit of the grantor, an interest or right in the property conveyed which did not previously exist. Examples would be the reservation by the grantor of an easement over the property conveyed or the reservation of a life estate in the property. (See EXCEPTION.)

RESTRICTIVE COVENANT

A private agreement, usually contained in a deed or declaration of restrictive covenants, which restricts the use and occupancy of real property, often relating to lot size, building lines, type of architecture and view planes. The covenant binds subsequent owners of the property.

RIGHT OF SURVIVORSHIP

The distinctive characteristic of a joint tenancy (also tenancy by entirety) by which the surviving joint tenant(s) succeeds to all right, title and interest of the deceased joint tenant by operation of law without the need for probate proceedings or another conveyance document.

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RIGHT-OF-WAY

The right or privilege, acquired through accepted usage or by contract, to pass over a designated portion of the property of another. A right-of-way may be either private, as in an access easement given a neighbor, or public, as in the right of the public to use the highways or streets, or to have safe access to public beaches.

ROYAL PATENT

The instrument issued by the Minister of the Interior of the Kingdom of Hawaii which evidenced the payment of the government commutation due upon lands awarded by the Board of Commissioners to quiet land titles at the time of the Great Mahele and gave fee simple title to such lands to the awardee. (See GREAT MAHELE, LAND PATENT.)