The vast majority of real estate transactions use one of four types of deeds to convey title. The differences between them areprimarily the covenants and warranties conveyed by the grantor—the individual or entity transferring the property—to the grantee, the individual or entity who is receiving it.
Warranties and covenants can vary from few-to-none in a quitclaim deed to the significant warranties conveyed in a general warranty deed.
Deeds can be less than one page, or they can be several pages long.They're normally prepared by an attorney. A deed is a legally defensible instrument after it's been signed by all parties, transferring property between them pursuant to its various restrictions, covenants,and special granting clauses.
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The General Warranty Deed
A general warranty deed provides the highest level of protection for the buyer because it includes significant covenants or warranties conveyed by the grantor to the grantee. Specifically, this type of deed promises that the grantor/seller owns and/or has a legal right to sell the property, and that it is free and clear of any liens, debts, or encumbrances.
The exact rules and provisions of a general warranty deed can vary somewhat by state, but you'll typically find the words "warrant generally" and "convey and warrant" contained in the verbiage. "Warrant" is the key term. It means "guarantee," and the seller/grantor is legally bound by the warranties conveyed.
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The Special Warranty Deed
A special warranty deed doesn't provide as much protection for the buyer. The grantor of this type of deed conveys the property along with just two warranties—that the grantor does indeed hold title to the property, and that the property wasn't encumbered during the grantor's period of ownership. It doesn't guarantee that it was unencumbered before the grantor took ownership, however.
You'll most likely encounter this type of deed when a trust or estate is transferring property, or when commercial property is sold. The seller might not have any knowledge of what transpired with the property before taking ownership, so it won't guarantee that the title was free before that point in time.
These deeds might say that the grantor "remises, releases, alienates, and conveys" interest in the property. The warranties are standard unless otherwise specified in the deed.
The Bargain and Sale Deed
A buyer gets no protection from encumbranceswhatsoever with a bargain and sale deed. This deed merely states that the grantor holds title to the property, but it doesn't assert that it's also free of liens. The grantee could be in trouble if title defects appear at a later date because the deed doesn't guarantee good title. The grantee would therefore have no legal recourse.
This type of deed has very specialized uses. It's most frequently found in tax sales and foreclosure actions when the history of a property might be a bit murky. The current owner is typically the lender or a taxing authority and doesn't know the property's history either with the last owner or at any time prior to then.
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The Quitclaim Deed
A quitclaim deed provides the least protection for the buyer, and its uses are very limited. This type of deed simply transfers any interest the grantor might have in the property. It doesn't guarantee that the grantor has any interest to convey.
You could enter into a quitclaim deed to transfer ownership of your neighbor's home because it effectively says, "IfI own this property, it's all yours." The grantor terminatesor "quits" any right and claim to the property, allowing the right or claim to transfer to the recipient/grantee.
Nor does this type of deed make any warranties against liens or encumbrances. It's most often used in divorce situations when property is being transferred between spouses and both have knowledge of the property's history. Presumably, they acquired it by general warranty deed and they know everything that's transpired with it since then.
Deeds Aren't the Only Limitations to Ownership Rights
There can be restrictions on ownership in deeds as well, but the vast majority of restrictions and covenants related to the use of property are contained in homeowner association documents and condominium association rules.
When it comes to real estate transactions and the different types of deeds used to convey property, there's a wealth of knowledge and nuances that play a crucial role. The article you've mentioned rightly outlines the four primary types of deeds: General Warranty Deed, Special Warranty Deed, Bargain and Sale Deed, and Quitclaim Deed. Let's dive deeper into these concepts:
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General Warranty Deed: This deed offers the highest level of protection for the buyer. It includes comprehensive warranties from the grantor to the grantee, ensuring that the grantor legally owns the property and guarantees its freedom from any liens or encumbrances. The verbiage usually contains phrases like "warrant generally" or "convey and warrant," emphasizing the assurance and legal responsibility the seller holds for the property's integrity.
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Special Warranty Deed: Unlike the General Warranty Deed, the Special Warranty Deed offers limited protection to the buyer. Here, the grantor guarantees two things: that they hold title to the property and that it hasn't been encumbered during their ownership. However, it doesn't cover any encumbrances or issues before the grantor acquired the property.
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Bargain and Sale Deed: This type of deed provides even lesser protection for the buyer. It only states that the grantor holds title to the property without asserting that it's free from liens or encumbrances. Buyers relying on this deed might face difficulties if title defects emerge later on, as it doesn't ensure a clean title.
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Quitclaim Deed: Offering the least protection for the buyer, the Quitclaim Deed transfers whatever interest the grantor might have in the property, without any guarantee of ownership or freedom from liens. It's often used in situations where the grantor is relinquishing any potential claim to the property without guaranteeing ownership or a clear title.
Each type of deed serves specific purposes and comes with varying levels of protection and assurances for the buyer. Legal expertise is often necessary in drafting and interpreting these deeds to ensure both parties understand their rights and responsibilities.
Additionally, beyond deeds, limitations on ownership can also be imposed by other documents like homeowner association rules and condominium association regulations. These documents can place restrictions on property use and dictate certain obligations for property owners beyond what deeds convey.
Understanding these distinctions is crucial for anyone involved in real estate transactions, whether as a buyer, seller, or legal professional, to ensure clarity and protection of interests in property dealings.
