One of the most important documents you will ever have in your life —other than your Last Will and Testament (“Will”) of course, is a deed.
What is a Deed and What does it do?
When it comes real estate, the document you need to buy, sell, or otherwise transfer property, is a deed.
A deed is the official written instrument (think rolled up white velum wrapped with a red ribbon) that gives you legal ownership. It is the legal document that conveys title in the property from one person to another.
A deed contains the legal description of the property and conveys title of ownership in the property.
Different Types of Deeds Convey Different Types of Interests.
Different types of deeds convey different title interests in the property. Title refers to the legal ownership rights a person has in property (whether personal property, like a car, or real property).
Title is what gives someone the legal right to the property itself—including the right to sell it.
So, for example, a person can have a life interest in property; meaning that he or she owns the property only for his or her lifetime. Once he/she dies, the property passes to another.
Or, someone can have only a percentage or joint interest in property, which may limit his or her right to sell or encumber the whole. In other words, s/he may only have the right to sell or encumber her/his percentage interest in the property.
Because deeds transfer the ownership rights of property, and there a number of ways to hold title to property, there are several types of deeds.
The most common are:
- General Warranty deeds
- Special Warranty deeds, and
- Quitclaim deeds
Because it is the deed that transfers property interests, it is important to understand what type of title each one of the deeds listed above transfers.
So, let’s look at each one in turn.
A Warranty Deed “warrants”—or guarantees—title to property.
A warranty deed can be either a “general” warranty deed or a “special” warranty deed.
General Warranty Deed
A general warranty deed guarantees that the person transferring the property has full title to it and is the sole owner of the property, with the right to sell it.
It also guarantees:
- That the property is free and clear of all liens and outstanding claims
- That title will withstand any claims of ownership by third parties
- That the grantor (i.e., seller of the property) is legally responsible for any breach of the warranty of title.
A “general” warranty deed gives a full warranty of title.
Special Warranty Deed
A special warranty deed still “warrants” good title. However, it provides a more limited guarantee.
A special warranty deed only guarantees that no title issues have arisen during the time the prior owner owned the property.
Because of this, the title conveyed by a Special warranty deed is not as good as title conveyed by a general warranty deed.
The deed that provides no guarantee at all of title is the quitclaim deed.
A quitclaim deed transfers title from the current owner to a new owner without providing any guarantees at all.
(By the way, there is no such thing as a “quick” claim deed. This is not just semantics. If someone tries to sell you a “quick” claim deed online or elsewhere, you need to know that no such thing exists and you may want to consider that you are being defrauded.)
We routinely see quitclaim deeds used for intra-family transfers.
We also see a lot of them being prepared as a “do it yourself” project by non-attorneys.
A quitclaim deed conveys only whatever tittle the current owner may have and does not guarantee that there are no claims against the property.
If for any reason the current owner has NO title to the property, or if there are a zillion claims against title, then that is what a quitclaim deed conveys —absolutely nothing, and a whole lot of title claims against it.
This means that the person giving the quitclaim deed makes no warranties or guarantees at all, and the person taking the quitclaim deed (i.e., you) has no legal recourse against him or her.
What most people don’t realize is that a quitclaim deed not only provides no guarantees of title, it may void your title insurance policy.
The moral of the story here is, just because you can buy a legal form at Office Depot or download it online and fill it out yourself, doesn’t mean that you should.
Especially when it comes to something as important as the deed to your home, please, get some legal advice before you consider taking or giving a quitclaim deed.
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