WHAT IS A REAL ESTATE DEED?
A real estate deed is a legal document which is used to convey the transference of ownership of real property. In real estate, a grantor (also referred to as the seller) transfers ownership to a grantee (also referred to as the buyer) through the exchange of a deed. In order for this deed to be legitimate, the deed must contain the property's accurate legal description in addition to the correct grantor and grantee information.
ESSENTIAL COMPONENTS OF A DEED
- All deeds must be in writing. There is no such thing as a verbal transfer of ownership. Although there is not a specific form which is required, the deed must include all of the necessary contents in order for the deed to be valid.
- The grantor must be competent to transfer the ownership to a grantee. The grantor must possess the mental capacity to both grasp and process that they are transferring the legal ownership of their property to a grantee.
- The grantee must be able to receive the grant of the real property.
- The verbiage of the deed must be clear so that each party (grantor and grantee) are distinguishable.
- The property's accurate legal description must be incorporated into the deed.
- The legal verbiage of conveyance must be used within the deed. This language is a requirement to validate the transfer of ownership from the grantor to the grantee.
-All individuals whom possess ownership rights of the property must sign as a grantor. If there is more than one owner and not all owners sign, the deed is not valid.
- The deed must have legal deliverance to the grantee. If the grantee is unavailable to receive the deed, a designated agent or party must be available to accept the deed on their behalf.
- The grantee must accept the deed in order to solidify the transfer of ownership.
WHAT ARE THE 4 TYPES OF REAL ESTATE DEEDS?
When transferring ownership of real property, there are various types of real estate deeds. It is very important to make sure the deed you are receiving grants you the most adequate level of protection against any and all potential issues or claimants. In this article, we will cover the four types of deeds and everything you need to know about the transfer of real property. Listed below are the four categories of real estate deeds. These deeds vary based upon the title warranties the grantor provides.
General Warranty Deed
Quitclaim Deed
Special Warranty Deed
Special Purpose Deeds
General Warranty Deed:
When purchasing a property, the General Warranty Deed provides the grantee (buyer) with the highest level of legal protection. When the grantor (seller) utilizes a General Warranty Deed, they essentially agree to several legally binding terms referred to as covenants. These covenants ensure that the grantee (buyer) is protected against any and all potential issues regarding claims to the real property. Listed below are a description of the covenants included within the General Warranty Deed.
The covenant of seisin - This covenant simply means that the grantor is assuring that they have rightful ownership of the subject property. Therefore, the grantor possesses the legal authority to transfer ownership of the real property to the grantee.
The covenant against encumbrances - This covenant provides that the subject property is free of any and all liens/encumbrances, unless explicitly recorded in the deed.
The covenant of quiet enjoyment - This covenant ensures the grantee that they will receive possession of the property without any disturbance stemming from a defective title. This is a promise that no title defects are associated with the transfer of ownership from the grantor.
The covenant of further assurance - This covenant is a guarantee that the grantor will provide any documents necessary for a clear title.
Quitclaim Deed:
Although it serves its purposes, a Quitclaim Deed, sometimes referred to as a Non-Warranty Deed, provides the grantee (buyer) with the least amount of available protection when purchasing real property. The Quitclaim Deed only transfers the grantor's interest in the property to the grantee (buyer). There are absolutely no warranties to the title to protect the buyer. If however the grantor (seller) has a clean title, the Quitclaim Deed is essentially as legitimate as a General Warranty Deed. On the other hand, if the title is indeed defective, there will be no legal remedies available for the grantee to force a resolution by the grantor. The grantor assumes no liability when using a Quitclaim Deed to convey ownership of real property.
Special Warranty Deed:
A Special Warranty Deed offers more protection than a Quitclaim Deed but less protection than a General Warranty Deed. With this conveyance of title, the grantor (seller) warrants that during their period of ownership, there were no defects of title which occurred. This essentially means that they received ownership of the property, and that during the time frame in which they maintained ownership, they did not do anything to negatively impact the title. This constraint is risky and provides the grantee (buyer) with no sort of protections pertaining to the potential title problems associated with previous owners prior to the grantor (seller) of the transaction. It is always best to demand a General Warranty Deed to fully protect yourself during a purchase.
Special Purpose Deeds:
Special Purpose Deeds are similar to Quitclaim Deeds in the sense that they offer no legal form of protection for the grantee. There are a variety of Special Purpose Deeds and they are all of relation to either third party claims and or court proceedings. Listed below are some common forms of Special Purpose Deeds.
Tax Deed - When a homeowner owes back taxes on their property, they are considered to have delinquent property taxes. After a specified time period of non payment, the county will auction off a tax deed which is essentially a bill for the outstanding taxes. The purchaser will then have what is known as an interest in the property. If the property owner fails to act within a certain time frame to resolve their property taxes, the owner of the tax deed will retain full ownership of the subject property. When purchasing tax deeds, there is also a process known as filing for quiet title which can be used to facilitate the transfer of ownership process.
Sheriff's Deed - In the event there is a judgement on a property, a sheriff's sale will be held to pay off the court ordered judgement. The highest bidder will then receive ownership rights in the property. Similar to the tax deed, the original property owner will be provided with a statutory redemption period to reclaim their property.
Administrator's Deed - When a property owner dies without a will in place, the local court will appoint an administrator to handle the assets of the deceased. The administrator will use what is known as the administrator's deed to transfer ownership to the selected grantee(s).
Executor's Deed - In the event a property owner dies and they do have a will in place, the estate's designated executor will use an executor's deed to begin the transfer of ownership process to the grantee(s).
*Although there are many more special purpose deeds, these are some of the more common special purpose deeds used to acquire property*
SUMMARY
When buying or selling a property, the transfer of ownership is made through the use of a deed. Each deed must contain certain criteria for it to be legally valid. There are a variety of deeds which offer different levels of protection for the grantee. Ultimately it is in the best interest of the buyer to always push for a General Warranty Deed. We highly recommend that when purchasing or selling property, you always make sure to work with highly trained real estate professionals to ensure your transaction process runs smoothly. Please do not hesitate to contact us for assistance with any of your real estate needs!
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