The word Title is defined as a term for all your legal rights to own property. The title is not a document, but a concept that states you have the rights to use the property in which it pertains to. But how does this differ from the Deed? The Deed is the legal, written, and recorded document that transfers title from one person to another in the purchase, transfer, or sale of a property. Because there are multiple ways to purchase property, there are several different types of real estate deeds you can use to complete the transaction. Here are some common deeds used in real estate dealings:
General Warranty Deed – In most traditional home sale transactions, a general warranty deed is used as it serves as a warranty or covenant that the property’s title is clean of defects. This deed allows for the grantor (seller) to release the property to the grantee (buyer) without any other entities coming forth with a claim or lien on the land or home, allowing the grantee to maintain sole claim to the property. The guarantee is not limited to the time the grantor owned the property but extends back to the property’s origins. To obtain a general warranty deed, a title search is conducted by your title insurance company. Whether expressly written into the deed, or implied by certain statutory words, basic warranties include:
Covenant of seisin: The grantor warrants that they own the property
Covenant as right to convey: the legal right to convey it
Covenant against encumbrances: The grantor warrants the property is free of any liens or encumbrances unless otherwise stated in the deed
Covenant of quiet enjoyment: The grantee is guaranteed that the title will hold against third parties attempting to establish title to the property
Covenant of warranty: the grantor will defend and protect the grantee against any future claims
Covenant of further assurances: The grantor will take action needed to dissolve any defects by that claim
Quitclaim Deed – Often referred to as an “as-is” deed, the quitclaim deed transfers any interest, title, or claim the grantor has to the grantee. This type of deed is most commonly utilized when interest in a property is transferred without a traditional sale taking place. This occurs in some instances such as when property is transferred between family members, when removing clouds on title, or when adding or removing spouses such as in a divorce situation.
Bargain and Sale Deed – The bargain and sale deed, also known as a Grant Deed, has no guarantee that the land being sold is free of encumbrances, but it does imply that the grantor has the right to sell the property. This type of deed is most often transferred from a foreclosure or tax sale. 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. Unfortunately, title insurance coverage is not always conveyed along with a bargain and sale deed, leaving the grantee potentially exposed to future claims.
Special Warranty Deed – special warranty deeds exist because not all property titles are clean at the time of the sale. This type of deed is typically used to address defects to the title that arose during the grantor’s ownership of the home. Title defects need to be cured before you can purchase the property, and this deed helps make a smoother home purchase possible. It does not grant full protection from future title claims, which is why it’s important to work with a professional title insurance company when purchasing a property with title defects. The use of the word “special” makes it appear that the deed is of higher quality than a general warranty deed, however, that is not true as the special warranty deed offers less protection against possible defects.
Give Investment Title a call if you have any questions or are interested in learning more about Title Insurance.