"I Just Want a Deed..."
A client may come to us and say, “I just want a deed”, but selecting the right type of deed is an important decision. Not all deeds are created equal. While all deeds will describe the party that currently owns the property (the “grantor”), the party that will become owner of the property when the deed is signed (the “grantee”), and provide a legal description of the property itself, the language describing type of deed will dictate what type of ownership is being transferred and how secure the grantee can be in his or her new ownership. Below are a few categories of deeds that are most commonly used:
General Warranty Deed. Deeds with general warranty language provide the maximum protection for the buyer. By conveying property in a general warranty deed, the grantor guarantees that he is the rightful owner, that there are no encumbrances on the property, that the seller has the right to convey the property, and that the buyer’s right to own the property will not be interrupted by another party’s claim to ownership (and that the seller will defend the buyer or take other necessary action if such a challenge arises).
Deed of Gift. In contrast to a deed of bargain and sale, pursuant to which money exchanges hands, a deed of gift transfers real property from one party to another without the exchange of money. These deeds often have general warranty language. A deed of gift is a useful tool for the transfer of property amongst family members but could have gift tax implications.
Transfer on Death Deed. These deeds are often used as estate planning tools. The owner of the property executes a transfer on death deed, which contains very specific, statutory language, noting that the real estate shall pass automatically to specified beneficiaries upon the death of the owner. The grantor can continue to use the property as he or she wishes and can even revoke the transfer on death deed if they wish. Because ownership passes to the beneficiary automatically upon the death of the owner, the ownership change is a “non-probate” transfer and does not have to go through the decedent’s estate.
Special Warranty Deed. A special warranty deed provides some, but not all, of the warranties of provided by a general warranty deed. Specifically, a special warranty deed does not protect the buyer from issues caused by prior owners. This type of deed is often used by executors or administrators of estates.
Quitclaim Deed. A quitclaim deed provides a grantor with the least protections of any deed. By executing a quitclaim deed, a grantor is transferring whatever interest they might have, no more and no less. It does not warrant that the seller has proper title or that the property is free of encumbrances.
Deciding which type of deed to use is often a strategic choice. Consult with an attorney to discuss your circumstances and decide which type of deed best meets your goals.
This blog post does not render any legal, accounting, or other professional opinion about your particular circumstances. This post does not create an attorney/client relationship. Because of the rapidly changing nature of the law, information can change and this publication may become outdated. Please contact Logan & Logan PLC to discuss your specific circumstances.