A deed is a document which indicates who owns a particular piece of real estate, from whom the person acquired their interest and a legal description of the property.
When the property is being sold, willed, given to another party other than the current owner, or otherwise transferred, the deed is being legally transferred from its current owner to a new owner. The law requires that a transfer of real property be done in writing. (Without a writing executed by the party to be bound, the transfer generally will be enforced by a court of law.)
Prior to the actual transfer of real property from the Seller to the Purchaser, however, the Purchaser generally engages a title company to search the public records for any problems which may affect title to the property. According to the American Land Title Association, 26 percent of title searches reveal an issue that must be corrected before purchasing the property. If these issues go uncorrected, they can pose big problems for the purchaser. Title issues that come up with some degree of frequency include liens, unresolved foreclosure issues, violations which became liens or judgments, missing ownership interests and even fraudulent conveyances.
When dealing with title issues and deed transfer issues or disputes, the attorneys at the Law Office of Alexander M. Fear, P.C. have the legal knowledge and experience to uncover problems (whether you are the purchaser or the seller) and resolve them before they kill a deal. It is important, however, to get experienced counsel involved early; waiting too long could mean the difference between a successful closing and a busted closing followed shortly thereafter by litigation.
The most common types of deed transfers are:
General Warranty Deed
The general warranty deed provides the greatest conveyance and protection to the grantee because it includes warranties or covenants that the seller conveys with the title.
Warranty of Title
Covenant of seisin: the grantor warrants the title that is being conveyed to the grantee. If the title proves to be defective, the grantee can sue for damages. The following warranties can be construed as being corollaries of the covenant of seisin.
Covenant of quiet enjoyment: the grantor guarantees that the title is superior to any other claims by 3rd parties. If someone succeeds in establishing a superior claim, then the grantor will be liable to the grantee for the damage. In fact, the “covenant of warranty forever” is the guarantee that the title will always be good, and that the grantor will compensate the grantee if it is later found that the title is defective. If the title defect is something that the grantor may cure, then the “covenant of further assurance” requires that the grantor do whatever is necessary to clear the title. Thus, if the grantor’s spouse had dower or curtesy rights to the real estate, but did not sign the deed, then the grantor may obtain a quitclaim deed to clear the title.
Warranty Against Encumbrances: The covenant against encumbrances is the only warranty that does not cover the title in some way, but guarantees that the only encumbrances to the land, such as mortgages, mechanics’ liens, or easements, are those that are listed in the deed. If, later, it is discovered that there was an encumbrance when title was transferred that was not listed in the deed, then the grantor is liable for the amount to have the encumbrance removed.
Warranty Against Encumbrances: The covenant against encumbrances is the only warranty that does not cover the title in some way, but guarantees that the only encumbrances to the land, such as mortgages, mechanics’ liens, or easements, are those that are listed in the deed. If, later, it is discovered that there was an encumbrance when title was transferred that was not listed in the deed, then the grantor is liable for the amount to have the encumbrance removed.
Special Warranty Deed
A special warranty deed guarantees less than the general warranty deed: that the grantor received title, and that there were no encumbrances other than what is listed in the deed while the grantor held title. The special warranty deed is usually conveyed with the phrase Grantor remises, releases, alienates, and conveys. There is no guarantee against title defects or encumbrances that may have been present when the grantor received the property, nor does it obligate the grantor to do anything further once the title is transferred.
Special warranty deeds are frequently used by temporary holders of real estate, such as trusts, or other fiduciaries, or corporations, who do not use or occupy the land for their own benefit. Often, the special warranty deed is issued when the real estate is sold in a tax sale.
Bargain and Sale Deed
The bargain and sale deed has no guarantee that the land being sold is free of encumbrances—the only implication is that the grantor has title, and not one that is necessarily free of defects. The bargain and sale deed is most often the deed that is transferred from a foreclosure or tax sale—hence, the name. Since the grantor, usually a bank or tax authority, did not occupy the land, it would not necessarily know of any encumbrances that may have been attached to the land by the previous owner, and, thus, the grantor does not want to guarantee against any encumbrances. Generally, the bargain and sale deed are conveyed with the words that grantor grants and releases or grants, bargains, and sells.
Quitclaim Deeds
The quitclaim deed carries no warranties at all—it only conveys the interest that the grantor had in the property, whatever that may be. The real estate interest may be full title, but the grantor makes no guarantees of it.
The quitclaim deed is used in those cases where the grantor does not want to assume further liability, or feels no need to guarantee title, such as when a family member transfers title to another family member or the grantor is only transferring some of his rights and not conveying a fee simple estate. A quitclaim deed is also used to cure a title defect, such as a misspelled name on the deed. The quitclaim deed is also used when the grantor’s title is not clear. For example, if the grantor inherited the property, but wants to sell it for the cash, she doesn’t want to guarantee something that cannot be known with certainty, and, thus, to limit her liability, she sells only her interest in the property—whatever it is. If the title later proves defective, or, if the grantor did not even own the property, but only thought that she did, the grantee of the quitclaim deed has no legal recourse against the grantor of the quitclaim deed.
Deed of Trust, Reconveyance Deed, and Trustee’s Deed
Since property can be conveyed through a trust, there are 3 different types of deeds associated with trusts, depending on the grantor and grantee. The trustor is the creator of the trust, the beneficiary is the party benefiting from the trust, and the trustee is the fiduciary administering the trust for the trustor.
A deed of trust (a/k/a deed in trust) is a deed that conveys title from a trustor to the trustee for the benefit of the beneficiary. A deed of trust is often used in lieu of a mortgage, when the borrower, the trustor, transfers the deed to a trustee as security for the loan given by the lender.
A reconveyance deed is a deed conveying title from the trustee back to the trustor, such as when the trustor pays off the loan that was secured by the real estate.
A trustee’s deed is a deed conveying title to another party who is not the trustor. In most cases, this would be the beneficiary. The deed must state that the deed was executed according to the terms of the trust.
Court-Ordered Deeds
State statutes stipulate the different kinds of deeds that are executed pursuant to court order: deeds by administrators and executors, sheriff’s deeds, and other types of deeds that are executed without the consent of the owner or through a will. Most court-ordered deeds also list the actual price of the real estate as consideration.
