There are many different types of Deeds which can be
used to convey real estate. Many of our buyers, especially buyers who
have previously owned real estate, want to know what type of deed we use
to grant ownership of property to you, the buyer. I'll explain this in
detail, but I'd also like to discuss several other types of Deeds, and
the advantages and disadvantages of each.
Warranty Deed
The Warranty Deed is the most common type of Deed used in Arizona because
it offers the best protection to the buyer. In Oregon, Warranty Deeds are
also commonly used. In California, Warranty Deeds are also used, but they
are uncommon. The closest equivalent to a Warranty Deed in California is
a Grant Deed, but in this discussion I will use Warranty Deed to also
mean Grant Deed.
The Warranty Deed contains three warranties. These warranties are
promises that the seller makes to the buyer regarding the condition of
the title to the property.
The first promise is the Covenant of Seisin. By the Covenant of Seisin
the seller warrants that he or she actually owns the property and has the
right to sell it.
The second promise is the Covenant Against Encumbrances. Like the name
implies, this is the seller's promise that the property is free and clear
of any encumbrances (liens, loans, mortgages, taxes, etc...).
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The third promise is the Covenant of Quiet Enjoyment. This obligates the
seller to defend the title against any claims as of the moment the deed
is delivered to the buyer. In other words, if a third party appears two
years after the warranty deed has been delivered to the buyer, and claims
to have an interest in the property, the seller is required to defend the
title which was given to the buyer.
We always use Warranty Deeds to convey land to our buyers when the land
is paid in full. Remember, when you purchase property, always insist on
obtaining a Warranty Deed when the property is paid off!
Bargain and Sale Deed
A Bargain and Sale Deed is a much weaker instrument than a Warranty Deed.
When a seller uses a Bargain and Sale Deed, the buyer does not get any of
the three covenants that a Warranty Deed conveys. In addition, the seller
is under no obligation to defend the title.
Quitclaim Deed
The third and final type of commonly used Deeds is a Quitclaim Deed. This
is, without question, the weakest instrument one could use to convey
property. Where a Warranty Deed guarantees that the seller owns the
property, and is selling it to a buyer, and will defend the title and
give the three promises, the Quitclaim Deed contains none of these
guarantees.
Basically, a Quitclaim Deed states -- IF the seller has an interest in
the property, they are giving it to the buyer. Notice the word IF. In
other words, "if it turns out that I have an ownership in this property,
then I'm giving whatever interest I may have to you, Ms. Buyer." It would
be perfectly legal for me to give you a Quitclaim Deed to the White House
-- if I have an interest in it, I'm giving it to you. There are no
guarantees with a Quitclaim Deed, and the seller is making no promises.
Obviously, we never use Quitclaim Deeds to convey any of our land
parcels. It just doesn't give the buyer any security.
Be sure to seek legal advise if you have questions about the different
types of deeds used in real estate transactions. For more information
about purchasing land thru an online land auction visit Radius Land.