Most people through either television or personal conversation have heard the term “deed” but might be confused on what this term entails. A real estate deed is a written document that transfers ownership of real property from a seller, often called the “grantor”, to a buyer, often called the “grantee.” A deed must contain: the names of the grantor and the grantee; a legal description of the property; and the grantor’s signature. The transfer of real property is complete upon delivery of the deed to the grantee or the filing of the deed in the local county real estate office.
Are All Real Estate Deeds the Same?
It is important to understand that not all real estate deeds are equal. In fact, deeds can come in several varieties that offer different layers of protection for buyers or obligations/liabilities for sellers. Therefore, it is crucial to understand the different types of real estate deeds. The different types of real estate deeds can include: warranty deeds; quitclaim deeds; limited warranty deeds; personal representative’s deeds; trustee deeds; trust deeds, and transfer on death deeds.
A warranty deed, also called a “general warranty deed”, is the real estate deed that offers the most expansive protection for buyers. With a warranty deed, the seller/grantor conveys multiple, legally enforceable promises dubbed “covenants of title”. The covenants of title include: the covenant of seisin; the covenant of the right to convey; the covenant against encumbrances; the covenant of warranty/quiet enjoyment; and the covenant of further assurances.
The covenant of seisin is when the grantor promises that they own and possess the property that they are conveying.
The covenant of the right to convey is when the grantor promises that they have a legal right to convey the real property that they are transferring.
The covenant against encumbrances is when the grantor promises that there are no other ownership interests in the property. In other words, the grantor promises that title is free of mortgages, liens, easements, future interests, future covenants, or similar interests.
The covenant of warranty/quiet enjoyment is when the grantor promises to compensate the grantee if title is defective or subject to an encumbrance and the grantee suffers an eviction.
The covenant of further assurances is when the grantor promises to execute further documents as may be necessary to perfect the grantee’s title at a future date.
As opposed to a limited warranty deed, a warranty deed contains all these covenants of title. Further, these covenants are enforceable against all grantors who conveyed a warranty deed. And their heirs or personal representatives.
A quitclaim deed is the most favorable type of real estate deed for sellers. A quitclaim deed does not provide any of the above covenants of title. Instead, a quitclaim deed only conveys to the grantee the grantor’s present rights and interests in the real property. Therefore, a buyer will have minimal if any legal rights against the grantor if future problems arise with the real property.
A quitclaim deed might appear to be a swindler’s transaction. However, it is often desirable in the following scenarios: when grantors only receive quitclaim deeds themselves; the transfer of real property between former spouses pursuant to a divorce decree; when property is transferred via a will or gift; and clearing up any irregularities of title.
Limited Warranty Deeds
A limited warranty deed is a deed that offers some, but not all, of the above covenants of title. Therefore, a limited warranty deed falls between a quitclaim deed and a general warranty deed. Furthermore, unlike a general warranty deed, grantees cannot enforce a limited warranty deed against anyone other than the grantor who conveyed them the real property.
Personal Representative Deeds
Personal representative deeds are often used to convey title to someone who purchases real property from an estate.
A trustee deed is when the grantor of a deed is a trustee acting on behalf of the beneficiaries to a trust.
A trust deed operates like a mortgage in that although the grantee is allowed to take possession, title is transferred to a trustee, who holds the title as security for the borrower/grantee’s loan. When the loan is paid in full, title is transferred to the grantee.
Transfer on Death Deeds (TODDs)
A transfer on death deed (TODD) is a deed that is executed upon the date of signing but does not take effect until the death of the grantor. In other words, after a TODD is executed, the grantor of the deed maintains their ownership of the real property, however, the real property will automatically transfer to the grantee upon their death.
Different Types of Concurrent Ownership
Along with different types of deeds, if multiple individuals are buying property together, it is important to understand the different types of co-ownership to determine how they will own the property together. This includes understanding the difference between a joint tenancy, a tenancy in common, and a tenancy by the entirety.
A joint tenancy is when co-owners of a property are each given an undivided interest in the whole property and a “right of survivorship.” Therefore, upon the death of a joint tenant, their interest in the property will go to the other joint tenant(s). The interest cannot be passed down to the deceased joint tenant’s heirs.
Tenancy in Common
A tenancy in common is when co-owners of property also have an undivided interest in the whole property but have no right of survivorship. Therefore, upon the death of a co-tenant, their interest will be passed down to their heirs.
Tenancy by the Entirety
A tenancy by the entirety is a type of concurrent interest that only exists between spouses. The married couple holds the property as one person. Upon the death of one spouse, the surviving spouse takes the interest of the decedent.
Overall, the appropriate type of deed will depend on the circumstances of a particular transaction. Luckily, Dudley and Smith, P.A. has multiple experienced real estate attorneys, including attorneys Joseph J. Dudley Jr. and Steven C. Opheim, who can help you in drafting and executing deeds. Contact our firm if you need any assistance with deed conveyances.
The law is continually evolving and Dudley and Smith, P.A.’s blog posts should not be relied upon as legal advice, nor construed as a form of attorney-client relationship. Postings are for informational purposes and are not solicitations, legal advice, or tax advice. A viewer of Dudley and Smith, P.A.’s blog should not rely upon any information in the blog without seeking legal counsel.