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What is a Deed of Property?

What is a Deed of Property?

Real property changes hands all the time through real estate sales. Part of the process and documentation is a deed of property. This critical document legally binds the owner to the property and everything on it.

What is a Deed to a House?

The term deed to a house is misleading because a deed refers to a piece of property, whether or not it has buildings or other structures. A property deed is a legal document that verifies the property's owner(s) and additional information. Usually, the deed shows the seller's information along with the buyer's. Real property is land, buildings, roads, and other structures.

What is a Deed in Real Estate?

The purpose of a deed of property is to transfer ownership of a parcel of land from one person to another. They are typically filed with the court or town hall of records that maintains property details. Deeds may also be private between individuals or companies and not filed publicly.

What Information is Contained on Deed of Property?

What Information is Contained on Deed of Property?

For a deed to be a legal document, it must have specific information on it. The most important details are the names of the buyer and seller. The document must specify the type of deed and establish whether it is a public or private deed. Additionally, a deed must:

  • Be in writing. There is no specific format required.
  • The person selling the property must legally own and be eligible to sell it.
  • The property must be fully described in the deed.
  • The deed must include legal language stipulating that property ownership is transferred from person A to person B.
  • The deed must be delivered and accepted by the grantee (the person buying).

Different Types of Deeds

Most people don't realize it, but there are a few different types of deeds for various purposes. A deed is typically categorized by the type of warranty/guarantee the grantor (seller) provides to the grantee (buyer). Some types of deeds include:

General Warranty Deed

A general warranty deed is the most common and provides optimal protection for the buyer/grantee. It promises that the seller/grantor has the legal right to sell the property and is free of any liens or encumbrances. A general warranty deed also protects the grantee's heirs from anyone coming along and making a prior claim to the land and buildings. The promises contained within a general warranty deed are called "covenants."

Special Warranty Deed

A special warranty deed, however, is a different animal. It is essentially a general warranty deed with less protection. The grantor/seller only guarantees that the title is valid as long as they have held it, meaning anything that happened before them owning the property is off the table. For example, some relative of a prior owner could crawl out of the woodwork and make a claim to your property after you have purchased it. Because the seller/grantor only guaranteed that the title is clean during their ownership, you could potentially lose the land.

During a real estate sale, many buyers will insist on a general warranty deed to protect themselves against title defects from previous owners that could affect their legal rights to the property.

Quitclaim Deed

A quitclaim deed offers the seller virtually no protection at all. The grantor makes no promises that the title is clean. If the title is clean, a buyer/grantee may consider the quitclaim deed as good as the general warranty deed, but if there are any defects in the title's past, there could be serious problems down the road. In which case, the grantee would have no legal recourse and may lose the property.

Special Purpose Deeds

Special Purpose Deeds

Along with the three types of deeds above, there are also special purpose deeds most often used by the courts to determine land ownership and transfers. They offer the grantee no protection against a clean or defective title and work much like a quitclaim deed. Some special purpose deeds include:

  • Administrator's Deed - The courts use an administrator's deed when someone dies without a will. The court will determine who the land belongs to and create a deed to transfer ownership.
  • Executor's Deed - An executor's deed is when someone dies with a will, and the executor (sometimes court-appointed) creates a deed to transfer property ownership.
  • Sheriff's Deed - A sheriff's deed is used when a piece of property goes up for auction, and the highest bidder wins. Whoever has taken possession of the land will furnish the winner with a sheriff's deed.
  • Tax Deed - When someone loses their property due to unpaid taxes, the town or courts will create a tax deed to transfer ownership.
  • Deed in Lieu of Foreclosure - When a property owner cannot pay their mortgage, they may provide the lender with a deed in lieu of a foreclosure which is cleaner for everyone. The lender will take possession of the property, close the mortgage, and then sell the land.
  • Deed of Gift - When someone gifts a piece of land to another person, they will create a deed of gift to transfer the title.

The Difference Between a Deed and a Title

There is a big difference between a title and a deed of property. A deed is a legal document proving that you purchased a piece of land and everything on it. A title is your legal right to ownership of the real property and your right to sell it, but it's not a tangible object like the deed is. Instead, it's a concept of ownership. For example, when you buy a car, you receive a paper "title" showing you own the vehicle. With real property, you get a deed proving you own it and a theoretical title that means you are the rightful owner.

If you are buying or selling real property, it's a good idea to understand the concept of a deed, how they work, and how they differ from a property title.

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