A real estate deed is a legal document that, when duly signed and delivered, conveys title or a more restrictive interest to specified real estate. Different types of deeds vary according to what the seller of a property (referred to as grantor) can convey, what he/ she wants to convey, and what warranties can be included in the deed.
General Warranty Deeds
The most common way to transfer ownership of real estate to a home buyer (known as the grantee) is by using a general warranty deed. It protects the buyer and covers acts taken by all previous owners in the chain of title. The grantee promises the new title holder that he or she can legally purchase, possess and enjoy the property.
The grantor conveys the property with certain covenants or warranties. These warranties legally bind the grantor. Whether expressly written or implied by certain statutory words, basic warranties include:
- Covenant of seisin: it means that the grantor warrants that he/she owns the property and has the legal right to convey it.
- Covenant against encumbrances: the grantor warrants that the property is free of any liens or encumbrances unless explicitly stated in the deed.
- Covenant of quiet enjoyment: the grantee is guaranteed that the title will be good against third parties attempting to establish title to the property.
- Covenant of further assurance: the grantor promises that he/she will provide any document or instrument if necessary to make the title good.
Special Warranty Deeds
Some sales transactions may not use a general warranty deed and use a special warranty deed instead. A special warranty deed is used to address title defects that occurred during the grantor’s ownership, so such title defects are cured and the sale can be completed.
With a special warranty deed, it is the grantor of the deed who conveys the property, along with two warranties: the grantor warrants that they have received the title, and that the property was not encumbered during their period of ownership.
A quitclaim deed is an instrument that provides the least protection for the buyer. It conveys the interest in a property that doesn’t come with a warranty. This deed exists to pass along any title, interest, or claim that a grantor has to a grantee. However, there is no title search involved, none of the covenants of a warranty deed are made, and there is no guarantee that a title is valid.
Even though this type of deed sounds risky, it could be the right option in certain situations. For example, it’s an excellent way to correct typographical errors in an existing warranty deed or to add or remove a person, such as a spouse or family member, from the title. Due to its lack of warranty, a quitclaim deed is best used between trusted family and friends.
Bargain and Sale Deeds
Finally, a bargain and sale deed is similar to a quitclaim deed in some regards, yet it can also be written with covenants. In general, a bargain and sale deed does not grant warranties against encumbrances on the property, nor does it guarantee the title is free of defects.
A bargain and sale deed can also be used in the process of foreclosure or court seizure. There is also the possibility with these deeds to include covenants, which offer the grantee some added protection that the grantor does indeed own and has the right to sell the property.