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Long ago, during the Middle Ages, real estate was transferred through a "livery of seisin" ceremony. The person "selling" the property took something from the land -- perhaps a twig or clod of turf -- and passed it to the "buyer." That ceremony was all it took to legally convey title to the property.
Today, we use property deeds instead of twigs to transfer title in real estate. But not all deeds are created equal, and each offers a different level of buyer protection.
What are property deeds?
Deeds are physical, legal instruments that convey ownership from one person (the grantor) to someone else (the grantee).
Property deed requirements vary by state. In general, however, legally valid deeds share common elements. First, a deed must be a written document, according to the Statute of Frauds. Also, deeds must:
- Be signed by a legally competent grantor (or grantors)
- Have an identifiable grantee (who doesn’t need to be legally competent)
- Be delivered to and accepted by the grantee
- Include a legal description of the land
- Involve some consideration (money or something of value)
- Include words of conveyance
Types of property deeds
Deeds are broadly classified as either official or private. Official deeds are usually used with court or legal proceedings. Most property transfers, however, use private deeds.
There are many different types of deeds, and they vary depending on the warranties the grantor conveys. Of all the deeds, four tend to be used the most in real estate transactions:
- General warranty deeds
- Special warranty deeds
- Bargain and sale deeds
- Quitclaim deeds
Each deed type offers a different level of buyer protection, based on what the grantor conveys:
|Type of Deed||Level of Buyer Protection||Grantor Conveys|
|General warranty||Highest||Specific covenants and warranties|
|Special warranty||Moderate||Limited warranties|
|Bargain and sale||Lower||Limited warranties|
|Quitclaim||Lowest||No covenants or warranties|
Here's a closer look at each.
General warranty deeds
General warranty deeds are the best for grantees since they offer the most buyer protection. They guarantee a clear title with no encumbrances.
Of course, these deeds give grantors the greatest degree of liability. That's because the grantor is legally bound by certain covenants and warranties (promises), including:
- The covenant of seisin and the right to convey. Guarantees the grantor owns the property and has the legal right to convey it.
- The covenant against encumbrances. Guarantees the property is free of liens and encumbrances, except as stated in the deed.
- The covenant of quiet enjoyment. Guarantees a clear title with no third-party claims against it.
- The covenant of warranty forever. Guarantees that if the title fails at any time in the future, the grantor will compensate the grantee for any losses. The grantee should still get title insurance because the grantor may be dead or insolvent at the time of a future claim.
Special warranty deeds
A special warranty deed (also called a limited warranty deed) carries just two covenants. The grantor warrants only that:
- They received title to the property back when they purchased it, and
- The property wasn't encumbered during the time they held title.
In general, special warranty deeds include "remise, release, alienate, and convey" in the granting clause. If other warranties are included, they must be specially stated in the deed.
Bargain and sale deeds
A bargain and sale deed offers less protection than a special warranty deed. While it implies that the grantor holds title, it doesn't guarantee the title is free of defects. Also, it offers no guarantees that the property is free of encumbrances.
These are most often used in tax sales and foreclosure auctions. That's because the grantor (usually a bank or tax authority), may be unaware of any encumbrances since they didn't occupy the property. Rather than accept that risk, the bank transfers the property with no guarantees about encumbrances.
Quitclaim deeds offer the least buyer protection. They convey whatever interest the grantor has in the property -- if any -- when the deed is executed.
With a quitclaim deed, the grantor "remises, releases, and quitclaims" their interest in the property and makes no promises about the quality of the title. There's no guarantee the grantor owns the property or has any rights to transfer it.
With no warranties, a grantee has little to no recourse if there's a problem with the title. As a result, quitclaim deeds are best for low-risk transactions, including those that don’t involve any money. They’re typically used to transfer title between family members, to add a new spouse to the title following marriage, or to remove a former spouse after divorce.
Quitclaim deeds are also used to cure a title defect, or a "cloud" on the title. A cloud is is anything that puts the title into question, such as a claim, unreleased lien, or encumbrance. For example, if the name of the grantee is misspelled on a warranty deed, a quitclaim deed with the correct spelling can be executed to perfect the title.
Know your deeds
The various property deeds offer different levels of buyer protection. Before closing on a real estate deal, be sure you understand the type of deed that you'll use.
In most states, the deed must be recorded in the appropriate government office in your county. In general, deeds are recorded sometime between two weeks and a few months after closing.
Keep in mind that the grantee named on the last deed of record is recognized as the legal owner. Therefore, if your deed didn't get recorded -- for whatever reason -- you could run into trouble if you try to sell or refinance. It's always a good idea to confirm that your deed has been recorded. To find out, check with your real estate attorney, the escrow agent, or the county clerk's office.
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