When a seller (grantor) sells real property to a buyer (grantee), the transfer of ownership of the property is recorded through a legal document called a property deed. A property deed must contain the grantor and grantee’s identification details and a description of the property to be considered legally valid. Naturally, there are several different types of deeds, each with unique protections and purposes. Let’s look at what deeds are, what they should contain, and the different types you should know about.
Quick Note: Real property refers to land and anything immovable attached to it, such as a road or bridge. It is more commonly referred to as a real estate.
What Are Property Deeds?
A property deed is a legal document used to transfer the ownership of real estate from the previous owner to the new owner. In the past, ownership of land was transferred through livery of seisin – a ceremonial act involving the handing of a clod of turf or twig from the land by the old owner to the new owner. The gesture, which was considered a legal transfer, was often accompanied by a written or verbal agreement. Society has since moved on to paper property deeds.
Essentially, the property owner accepts a form of consideration, such as money from a buyer, in return for transferring their property title to them. The different types of real estate deeds record this transfer and can be used by governments to enforce property taxes and by buyers to confirm ownership.
Note: Primarily, there are two types of deeds – official and private. The latter is the most common and usually marks a transaction between individuals or businesses. Official deeds, on the other hand, are executed following legal or court rulings.
Most Common Types of Deeds
Away from the official-private classification, deeds can also be categorized depending on the type of protection they offer the involved parties. The most common types you should know about are:
1. Quitclaim Deed
A quitclaim deed offers the least protection to the grantee of all the deeds on this list. It is commonly used when the property is changing hands between people who know and trust each other, such as family members. In the event the grantor is found to not have legally owned the property, the grantee has no right of legal recourse. This deed also does not protect the grantee against existing liens or debts.
2. Warranty Deed
Just as there are many types of property deeds, there are two types of warranty deeds, each offering a different level of protection. They are:
General Warranty Deed
A general warranty deed offers the highest level of protection to the grantee of any deed. It guarantees that the grantor holds full legal rights over the property and that said property is clear of any liens and debts. Additionally, it gives the grantee the right to pursue legal action if an issue or unsettled matter arises. It also gives the grantee a covenant against encumbrances, a covenant of warranty forever, a covenant of further assurance, and a covenant of quiet enjoyment.
Special Warranty Deed
This deed guarantees that the grantee is protected against any claims or issues that may have come up during the period the grantor owned the property. It does not cover the time before that and does not come with as much protection as its counterpart.
3. Deed of Trust
A deed of trust is signed by a lender (beneficiary), a borrower (trustor), and a trustee. While in effect, the trustee holds the property’s legal title until the trustor pays the lender. The trustor maintains an equitable title, which allows them to use and enjoy the property meanwhile.
4. Grant Deed
This deed is used to transfer the interest in real estate from the grantor to the grantee for a previously agreed-upon price. Although it affirms that the grantor owns the property, it does not protect the grantee from title defects.
5. Mortgage Deed
A mortgage deed is a legal document signed by a lender and homeowner allowing the former to place a lien on the latter’s house if they do not repay their loan. While in effect, the lender holds the property’s legal title until the loan is repaid.
6. Bargain and Sale Deed
These types of real estate deeds are commonly used for residential properties sold at foreclosure. They guarantee that the seller owns the property but do not guarantee that the property is free of debt or liens. Consequently, it transfers any lien against the property to the grantee.
7. Special Purpose Deeds
Special purpose deeds are commonly used in situations involving legal proceedings or a grantor acting in an official capacity. They provide little to no protection to the buyer and include:
Unlike an administrator’s deed, this deed is used when someone dies with a will, and their named executor disposes of their estate.
An administrator’s deed is used when someone dies without a will, and the court appoints an administrator to dispose of their estate.
When land belonging to a debtor is auctioned following a judgment, the buyer receives a sheriff’s deed, which is essentially the deed the debtor has.
Deed in Lieu of Foreclosure
A borrower in default on their mortgage can receive this deed to prevent foreclosure. If the lender accepts it, the mortgage is terminated.
Deed of Gift (Gift Deed)
A deed of gift is used to show that property has been transferred for free as a gift.
You get a tax deed when you buy property sold for unpaid taxes.
Essential Elements of a Deed
Although deed contents may differ slightly depending on state requirements, most types of property deeds should contain the following key elements to be legally valid:
- Ascertainable identification of the grantor and grantee.
- An adequate description of the property
- Necessary operative terms and language that indicate the transfer of ownership.
- The grantor(s)’ signature(s)
- The grantee’s signature
A property deed records the transfer of ownership of real property from a seller to a buyer, making it a very important legal document. As we have seen, there are different types of deeds, which can be official and private and which provide buyers with different levels of protection. Essentially, a quitclaim deed gives you the least protection, a special warranty more limited protection, and a general warranty the most protection under the law. It is important to involve a real estate attorney in the drafting, transfer, and signing of a real estate deed to make sure your ownership rights are protected.