A deed is a legal document that transfers ownership of real estate from one party to another party. A deed typically contains two parties. The “grantor” is the party that is conveying the land, and the “grantee” is the party that is receiving the land. Deed requirements vary from state to state; however, there are some essential elements that must always be present:
- It must be in writing. There is no formal, universal document that must be used, but the information must be recorded.
- The grantor must be competent.
- The grantor and grantee must be clearly identified.
- The property must be clearly described, usually with a lengthy “legal description.”
- Legal language of conveyance must be included.
- The deed must be signed by the grantor(s).
- The deed must be legally delivered to and accepted by the grantee.
There are four major types of deeds that you should be familiar with if you are considering granting real estate, property or land.
General Warranty Deed
This type of deed offers the grantee the most protection. In a general warranty deed, the grantor will make multiple legally binding promises (or covenants) and warranties to the grantee. Typically, these covenants include:
- Warranty of title: warrants that the grantor has valid title to the property being conveyed
- Covenant of seisin: means the grantor is guaranteeing they have the legal right to convey the land
- Covenant against encumbrances: guarantees the land is free of liens, mortgages, easements or other encumbrances unless otherwise noted in the deed
- Covenant of quiet enjoyment: ensures the grantee will have quiet possession of the property and will not be disturbed
- Covenant of warranty: guarantees that there is no superior title on the property and that the grantee and its heirs and assigns will enjoy the property in perpetuity without interruption
- Covenant of further assurance: the grantor promises to do whatever reasonably necessary to perfect the grantee’s title
Special Warranty Deed
Unlike a general warranty deed, which basically protects the grantee from any claims or encumbrances on the land prior to possession, a special warranty deed only requires the grantor to warrant that they did not encumber the property during his or her ownership tenure. The grantor makes no warranties about past grantors and about the state of title before his or her ownership.
This provision is less beneficial for the grantee and offers less protection than a general warranty deed.
Also called a nonwarranty deed, a quitclaim deed simply conveys whatever interest the grantor currently has in the property to the grantee with no other warranties or considerations. Because this deed has no guarantees, regardless of the condition of the deed as offered by the grantor, the grantee has no legal recourse if there are any defects, liens or claims. This type of deed offers the grantee the least amount of protection while basically absolving the grantor of any responsibilities in regard to the property. Quitclaim deeds are often used for inter-family conveyances since the title to the property is somewhat assured when a family member is the grantor.
Special Purpose Deeds
These deeds are typically used in conjunction with court proceedings. They are essentially quitclaim deeds and, as such, do not offer the grantee any protection. A few of the more common special purpose deeds are:
Administrator’s Deed: Typically used when a person dies without a will. A court administrator will dispose of the deceased’s assets, and an administrator’s deed will then be used to convey the title of any real property to the grantee.
Executor’s Deed: Typically used when a person dies with a will. An executor’s deed is used to transfer a title or real property of the deceased to the grantee.
Sheriff’s Deed: This deed is issued to a bidder at a Sheriff’s sale when they have successfully bid on property. Typically, property in the midst of a mortgage foreclosure is available at a Sheriff’s sale.
Tax Deed: Typically issued when a property is sold for delinquent taxes.
Deed in Lieu of Foreclosure: Typically given directly to the lender for a borrower that is behind on their mortgage. This type of deed can prevent foreclosure proceedings. If the lender accepts the deed, the loan is terminated.
Deed of Gift: Used to convey the title on a property when it is given for no consideration or very little consideration. In some states, failure to record a gift deed in a certain amount of time can result in voiding the deed.
The most important feature of any deed is having it recorded and filed accurately with the necessary government offices. Whether you are the grantor or grantee, make sure to thoroughly examine the deed and understand all covenants outlined therein. For further assistance, consider finding an attorney who can help you tailor the deed to your specific circumstance.