If you have ever bought or considered buying a piece of property, then odds are you have heard of a deed. A deed is essentially a written document used to give title, or ownership, to property. While title to property can be transferred in ways other than using a deed, it has long been the most common means of transferring title, or ownership, from seller to buyer. Generally, a deed is any writing that transfers the ownership in a piece of property that has been signed by the seller, notarized or acknowledged, and traditionally it had to be delivered from the seller to the buyer and accepted by the buyer.
So, a deed is a deed is a deed, right? Well, not exactly. In truth, there are several types of deeds and not all are created equal. Some heavily protect the buyer while others ensure that the interests of the seller are better protected. When it comes down to it, there are really two main types of deeds, the quitclaim deed and the warranty deed. Most every other type of deed provides terms and protections that are somewhere in between the quitclaim deed and the general warranty deed. Below you can find a brief description of the quitclaim deed and the warranty deed, their uses, and the general covenants and protection that each may provide.
1) The Quitclaim Deed
The quitclaim deed is truly a special document. In the past, a quitclaim deed would convey whatever interest the seller had in a property at the time the deed was given. Thus, if the seller had title to the property and issued a quitclaim deed to a buyer, then the buyer would get the title to the property. If, however, the seller did not actually have any interest in the property, they actually give the buyer absolutely nothing. For example, if someone were offering to sell you the great state of Minnesota, they could put together and issue to you a valid quitclaim deed to Minnesota and you would receive everything that the individual owns in terms of right, title, and interest to Minnesota, which is absolutely nothing. Therefore, if the seller does not own the property, then a quitclaim deed for the property from that seller conveys nothing. Just the same, if the seller does own the property a quitclaim deed for the property from the seller will convey the property.
From its description, it would seem logical that quitclaim deeds are the invention of swindlers and con artists; however, this is not the case. The quitclaim deed has emerged as a way for sellers to protect themselves. You have probably heard the phrases “buyer beware” and “as is,” in the legal world we call that Caveat Emptor. In the past, Real Estate was simply sold as is, and as such, the buyer was to beware their purchase. As time went on buyers began to demand greater protections from sellers through their deeds. As the law developed, however, so did the warranty deed, which usually offered much greater protection to the buyer from defects in title.
As with most legal documents, however, there is no one size fits all transactions deed. For this reason, the quitclaim deed came into favor for many types of Real Estate sales transactions. Those transactions that most often utilize a quitclaim deed are those in which the seller may be unsure of their chain of title or some long abandoned easements, and in situations in which the landowner wants to gift the property away but does not wish to retain any future liability that may arise from the property. In the simplest terms, a seller uses a quitclaim deed when, for whatever reason, they need to sell the property as is and without any representations or warranties as to the interest they may hold in the property they are selling. So, if you are a buyer and your seller is demanding the use of a quitclaim deed make sure to get adequate Title Insurance, and probably be extra careful in your investigation into the state and title of the property.
2) The Warranty Deed
By far the most common type of deed used in Real Estate transactions is the warranty deed. This type of deed provides a much greater amount of protection to the buyer of real estate. As such, the general warranty deed has fallen into favor with buyers across the board.
The warranty deed is a deed that stipulates that the seller is giving to the buyer certain warranties regarding the property being sold. The warranties that are provided in the warranty deed are fivefold and include that the seller: 1) owns the property being sold; 2) has the right to sell the property to the buyer; 3) that the property is free from any encumbrance not listed in the deed, such as an easement or certain restriction regarding the use of the property; 4) that the seller will give the buyer anything else that the buyer may need in order to establish good title to the property; and 5) that the seller will defend the buyer from any future claims from others regarding that interest in the property. These warranties are placed within the general warranty deed as covenants, and are the covenant of right to convey; the covenant of encumbrances; the covenant to warrant and defend; the covenant of quiet enjoyment; and the covenant of further assurances.
It is important to understand that the warranty deed does not guarantee the buyer that they are getting good title to the property or that is free from any encumbrances not listed in the deed. Instead, it guarantees the buyer that if there is anything wrong with the property that was not listed in the deed, that the seller would either remedy the problem or pay the buyer for the damages that they have suffered as a result. It is also important to understand that just because a warranty deed was used does not mean that the buyer is completely secure in their purchase.
A warranty deed does provide protection to the buyer from the seller, but not from anyone else. In other words, if the seller is no longer available (if they have died, gone bankrupt, or simply cannot be located), then the buyer will have no one to fall back on if some problem should emerge with the title to the purchased property. It is for this reason that Title Insurance is still necessary despite the fact that a buyer has received a warranty deed from the seller.
Quitclaim deeds and warranty deeds are not the only kinds of deeds that are available. Special warranty deeds, also called limited warranty deeds, provide the majority of the warranties and covenants of a general warranty deed, but not the covenant of seisin, which is the warranty that the seller actually owns the land. Trustee deeds are given by trustees for property that is held in trust. Personal representative deeds are given by the personal representative of an estate to property held in that estate. Finally, there is the conservator’s deed, which is a deed from the conservator of some protected individual such as a child or disabled adult. Ultimately, the property being sold and the parties involved will dictate what kind of deed should be used, but odds are you are likely to see a quitclaim deed or a general warranty deed.
Common Terms in a Purchase Agreements