There are many different terms that are related to the buying and selling of property making it quite easy to get a little confused. It's safe to assume that mostly everyone already knows that a property deed is an official document used to transfer real property from a seller (grantor) to a buyer (grantee). While property deeds are fairly common, not many people are aware that there are many different kinds of deeds associated with the transfer of property. This is because each buying or selling experience is unique and the type of deed needed depends on the specific terms and type of property. Whether you're planning to buy a new piece of property, sell your home or perhaps get into the real estate industry yourself, you should know the basics about the most popular types of property deeds. To give you a better understanding of the different options, here is a little about some of the most common property deeds used in today's world of real estate.
General Warranty Deeds
The most basic form of property deed is known as a general warranty deed. This type of deed includes a warranty, which means that the seller will offer protection for the buyer against other interests who attempt to claim ownership or in the case of blemishes on the title such as previous mortgages, liens or judgments. If any problem with the title does arise, the seller will be held responsible and will have to pay the buyer any damages accrued. Most buyers who get a mortgage loan from a banking or lending institution prefer having a general warranty deed because they provide the most protection for the grantee. Also, most title insurance companies are far more likely to insure a piece of property with a general warranty deed.
Special Warranty Deeds
A special warranty deed is actually fairly similar to a general warranty deed. The only big difference is that a special warranty deed limits the guarantee provided by the seller to current or future claims against the property, but not prior to that time. This means that a seller will only be responsible for debts or problems with the title that occur during or shortly after his or her ownership of the property. The laws regarding special warranty deeds varies state to state, so you may want to research the regulations for the state you live in or are planning to purchase property in.
Grant Deeds
A grant deed doesn't actually offer any type of warranty. It's basically used to assure the buyer (or grantee) that the title for the property does not legally belong to anyone else other than the grantor. It also guarantees that there are no other problems associated with the title that would inhibit the transfer of the property. The document itself simply describes the property and contains language granting the grantee ownership. Generally, grant deeds are used in some states such as California, while most other states usually require some type of warranty deed for the transfer of property.
Quitclaim Deeds
A quitclaim deed isn't necessarily a document to convey actual property, but instead is used to divest a party from any current or future interest in a particular piece of property. These type of deeds are commonly used during a divorce when the property was owned by two individuals who agreed that it will be transferred to only one spouse. Other than that, quitclaim deeds provide little to no protection to the person receiving the property. Unlike other types of deeds that include warranties, a title search is not performed to draw up quitclaim documents, so they don't ever guarantee a clear title status. This could mean that the person receiving the property may be left responsible for any claims or title problems that may arise after the signing of the quitclaim.
Deed for Bargain and Sale
Also referred to as a “bargain and sale without covenants”, this type of deed poses the greatest risk for grantees as it is usually used to convey property that has been purchased at a foreclosure auction or sheriff's sales. These documents do identify the bank or other type of lega institution as the legal titleholders for the property, but it does not guarantee that the title is clean. Although, it's important to note that if you do end up purchasing property at a sheriff's sale or auction, any information regarding past due taxes should be made available to the buyer. Just keep in mind that while you may be getting a good deal upfront, you could possibly be surprised down the road by how much you could end up owing.
As you can see, there are many different kinds of property deeds. It's important to keep this information in mind if you are planning to buy or sell your home or property. Most mortgage lenders and title insurance companies prefer buyers to attain a general warranty deed before proceeding with the loan or coverage because it's the deed that provides the most protection. There are some instances when they allow special warranty deeds, but it's not too entirely common. To find out which property deed best suites your situation, you may want to talk with your title insurance representative, your real estate agent, broker or lender. All of the documents needed to establish one of these deeds should be available at your local tax office or courthouse. Make sure you fill out the appropriate forms for the deed you need, then have them signed by both parties and notarized by a qualified notary before being filed with the local county office. Laws regarding the recording of deeds varies by state, so you may want to research the guidelines for the state you live in. As a matter of fact, you might not actually have to do the filing of the documents yourself because it's usually handled by your escrow agent. He or she should then provide you with a copy of the deed and verification that is has been legally recorded.
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