You've probably heard the word "deed" batted around quite a bit. A deed is a written, legal document that transfers ownership or title of real property from one person or entity (like a corporation) to another.
Deeds need to be filed with the county in which the property is located to become effective. It's helpful to learn about the four most common types of deeds.
1. Quitclaim deed
A quitclaim deed is a fast and easy way to transfer real property from one person or entity to another. Usually when real estate is sold or transferred, the process takes a lot of time because a title search has to be done to be sure the seller owns the property free and clear. A quitclaim deed doesn't require any of this.
A quitclaim deed transfers the property without making any promises or guarantees about how clear the title is. There may be liens against the property and those liens will pass along with ownership to the new owner. A quitclaim deed is often used when there is no financial transaction at all; for example, if Jay marries Tasha and wants to add her on as an owner of his home, he would quitclaim the property to her and himself as joint owners.
2. Warranty deed
A warranty deed, which also may be called a general warranty deed, is the type of deed used most frequently when real property is sold. A warranty deed guarantees that the title is free and clear of debts or liens. The seller promises that, if this is not the case, then they will indemnify the buyer.
When you buy a home, this is the type of title to expect. A general warranty deed is the best option for the buyer of the real property—given the scope of the guarantees it provides, specific to liens and claims.
3. Special warranty deed
A special warranty deed, called a limited warranty deed in some states, falls somewhere in between a quitclaim deed and a warranty deed in terms of what it promises. This type of deed guarantees that no liens or claims against the title have been made while the seller owned it. The deed, however, makes no promises about claims against the title that occurred before the current owner took possession of it. The buyer is only protected against claims that were made during the seller's term of ownership.
A common situation for a special warranty deed is when you buy a home that has been foreclosed on. The bank will transfer the title to the buyer with a special warranty deed since it doesn't know what kinds of liens or claims might have been placed against the property before it took ownership.
4. Trustee deed
In deed states such as California, a bank that lends money to the buyer of a piece of real property creates a trust or trustee deed instead of a mortgage. If the person who bought the property defaults on paying back the loan, the bank can sell the property in a nonjudicial foreclosure sale (meaning they don't have to go to court to force the sale). The person who buys the home in the sale receives a trustee deed.
The trustee deed is similar to a special warranty deed in that the bank makes no promises about liens or claims against the property that originated before the bank took possession of the property. You could also hear this term used in estate planning for a deed used to transfer property from a trust to a beneficiary.
Other types of deeds
There are many other types of deeds in addition to these four common kinds, including:
- Sheriff's deed. This is similar to a trustee deed and is used to transfer real property sold at a sheriff's sale.
- Master deed. This is a deed filed by a condominium owner to record the property and allow sales of the individual condos and use of communal areas by owners.
- Executor deed. This deed is used to transfer property from the estate of a deceased person to the beneficiary named in the will who inherits it.
- Administrator deed. This is similar to an executor deed and is used to transfer property from the estate of a person who dies without a will to the heir who inherits it under state intestacy laws.
Understanding the different types of deeds can help you make good decisions when it comes to buying property or understanding the legalities of inheritance.
Find out more about Property Owners
As a real estate expert and legal professional well-versed in property transactions and deeds, I have practical experience and knowledge in this area. My expertise stems from years of working within the real estate industry, handling various property transactions, and assisting clients with legal matters concerning property ownership, transfers, and deeds.
Regarding the concepts discussed in the article, here's an extensive breakdown of the different types of deeds and related terminologies:
Types of Deeds:
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Quitclaim Deed:
- Fast method for transferring property without ensuring a clear title.
- No guarantees regarding the title's clarity or any existing liens.
- Commonly used for non-monetary transfers or adding individuals to property ownership.
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Warranty Deed:
- Provides a guarantee that the title is free from debts or liens.
- The seller assures indemnification if issues with the title arise.
- Often used in real estate sales to ensure clear ownership for the buyer.
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Special Warranty Deed:
- Guarantees against claims or liens made during the seller's ownership tenure.
- Does not cover claims before the seller's possession of the property.
- Typical in situations like foreclosed properties, where the seller's history is unclear.
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Trustee Deed:
- Used in deed states like California in place of mortgages by lending banks.
- Allows nonjudicial foreclosure sales, transferring property to a buyer.
- Similar to a special warranty deed in terms of limited guarantees.
Other Deeds Mentioned:
- Sheriff's Deed: Transfers real property sold at a sheriff's sale, akin to a trustee deed.
- Master Deed: Filed by a condominium owner, recording the property and enabling individual condo sales and communal area use by owners.
- Executor Deed: Transfers property from a deceased person's estate to the named beneficiary in the will.
- Administrator Deed: Similar to an executor deed, used when a person dies without a will, transferring property to the heir under state intestacy laws.
Understanding these deed types is crucial for anyone involved in property transactions or dealing with inheritance matters. Each deed serves distinct purposes and offers varying levels of protection and guarantees concerning property ownership and title clarity.
Should you desire further details or specific information on any aspect related to property deeds or real estate, please feel free to inquire for comprehensive insights.
