For those of you who don’t know, a deed is a legal document that transfers one person’s title to another. Or, in some instances, the written proof of ownership for some form of asset or interest.
Deeds are the legal documents that transfer title. It is the written document itself that conveys ownership. Deeds must be in writing and usually found at the county courthouse in which the property exists.
There are many different types of deeds, and we are going to go over the most common and the ones that will surely show up on the real estate exam. When a property changes hands, it can change hands in different forms (with different qualities); that’s where the various types of deeds come into play.
What Is a General Warranty Deed?
Definition: A deed where the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to the grantee (buyer).
The most common type of deed is a general warranty deed.
The general warranty deed offers the grantee the most protection. With this type of deed, the grantor makes a series of legally binding promises (called covenants) and warranties to the grantee agreeing to protect the grantee against any prior claims and demands of all persons whomsoever in regards to the conveyed land.
General warranty deeds protect homeowners from stakes and claims from previous people, from the beginning of time to right now. It also protects homeowners from any potential encumbrances. A general warranty deed grants an undeniable fact that this property is coming with no liens and no heirs; they could potentially lay claim to the piece of property.
What Is a Special Warranty Deed?
Definition: A deed in which the grantor warrants only against defects occurring during their ownership.
A special warranty deed is a variation of the more commonly issued general warranty deed.
So what does this mean? Well, some deeds offer no warranties at all, so a special warranty deed is at least one step above that as far as protections are concerned.
Both general and special warranty deeds provide a guarantee that the seller owns the title and is free to sell the property. With a special warranty deed, the title warranty is only for the period during which the seller held title to the property. Special warranty deeds do not provide a guarantee against any mistakes that may have existed before the seller’s ownership of the property. Thus, the grantor of a special warranty deed is only liable for debts or other encumbrances to the title that they caused or that happened during their ownership of the property.
So in plain terms. Where the guarantees in a warranty deed cover the property’s entire history, the special warranty deed only covers the time the seller owns it.
What Is a Quitclaim Deed?
Definition: A deed that contains no title covenant and thus offers the grantee no warranty as to the status of the property title.
A quitclaim deed releases a person’s interest in a property without stating the nature of the person’s interest or rights, with no warranties of that person’s interest or rights in the property.
Quitclaim deeds are typically used to transfer property in non-sale situations. Non-sale situations such as transfers of property between family members. Quitclaim deeds are used to add a spouse to a property title after marriage, remove a spouse from a title after divorce, and much more.
What to Know for the Real Estate Exam
You need to know what a deed is; remember: a deed is used to prove ownership of a property and the quality of ownership. Secondly, you need to understand the three most important types of deeds: General warranty deeds, which hold the most protection. Special warranty deeds that hold some protection. And lastly, quitclaim deeds which hold no protection.