Understanding Property Deeds

Property deeds are legal documents that transfer ownership of real estate from a grantor (seller) to a grantee (buyer). Land or everything related to it, such as buildings or roads, is referred to as real property. A deed must include the grantor and grantee’s names, as well as an appropriate description of the property, in order to be legally enforceable.

Deeds are divided into several kinds, including warranty, quitclaim, and special purpose. This article will explain what deeds are, what must be contained in a deed to make it legally enforceable, and the many forms of deeds used in property transactions.

What Are Property Deeds?

A property deed is a written and signed legal document that transfers ownership of real estate from the previous owner (the grantor) to the new owner (the grantee). Historically, real estate was transferred by the “livery of seisin,” a ceremonial ceremony. In this act, the individual transferring the land gave the person taking delivery of the land a twig or clod of turf from the land. Though the livery of seisin officially transferred the title to the property, it was often accompanied by a verbal or written statement. Today, a paper deed is used to transfer title to real estate.

deed.jpg

Types of Deeds

Deeds can be categorized in a variety of ways. Deeds are categorized as either official or private in general. Official deeds are carried out as a result of legal or court proceedings. Individuals and businesses, on the other hand, use private deeds for the majority of property transactions.

The type of title warranties offered by the grantor is also used to categorize deeds. The following are examples of several types of deeds:

General Warranty Deed

The grantee is best protected by the general warranty deed. The grantor makes a series of legally binding pledges (called covenants) and warranties to the grantee (and their heirs) in this type of deed, vowing to defend the grantee (and their successors) against any prior claims and demands of all individuals whomsoever in relation to the conveyed land. The following are common title covenants found in a general warranty deed:

  • the covenant of seisin, which guarantees that the grantor owns the property and has the legal authority to convey it.
  • the covenant against encumbrances, which states that the grantor guarantees that the property is free of liens and encumbrances, unless otherwise mentioned in the deed.
  • the quiet enjoyment covenant, which states that the grantee shall have peaceful possession of the property and will not be disturbed because the grantor’s title is defective.
  • the covenant of further assurance, in which the grantor commits to supply whatever document required to make the title good.

Special Warranty Deed

Where in a general warranty deed the grantor promises to warrant and defend the title conveyed against the claims of all persons, the grantor of a special warranty deed guarantees that they got the property title and that they have not done anything to cause a defect while in possession of the title.

In other words, only problems that occurred while the grantor was the owner of the property are covered by the warranty. Because of this limitation, the special warranty provides less protection to the grantee than the standard warranty deed. Many real estate buyers will demand a general warranty deed to shield themselves from complications that may occur as a result of a special warranty deed.

Quitclaim Deed

The quitclaim deed, often known as a non-warranty deed, provides the least level of protection to the grantee. This sort of deed transfers the grantor’s current interest in the property, if any. There are no guarantees or promises given about the title’s quality. The quitclaim deed is practically as effective as a general warranty deed if the grantor has solid title. The grantee, on the other hand, has no legal recourse against the grantor if the title is defective. Whether the grantor is unsure of the status of the title (or if it has any faults), or if the grantor does not want to be liable under the title covenants, a quitclaim deed is frequently utilized.

Special Purpose Deeds

Special purpose deeds are frequently used in court proceedings and in situations when the deed is signed by someone acting in an official capacity. Most special purpose deeds are effectively quitclaim deeds, with little to no protection for the grantee.

The Bottom Line

A deed is used to transfer the ownership of a property. In order for a deed to be legally enforceable, it must contain some basic characteristics. Different deeds provide different levels of protection to the grantee, and the form of the deed determines the grantor’s obligations. Because deeds are significant legal papers that affect ownership interests and rights, any transaction involving them, such as the closing of a property purchase, should be discussed with a skilled real estate attorney.

Looking for a stress-free way to get started in real estate investing? See how BuyProperly employs a fractional ownership concept to assist investors build their real estate portfolios by having a look at our properties.

Related Topics to Deed: