Types of Deeds
Deeds Convey Property in Different Ways
Whether you are selling your home, bequeathing it to a child, or taking sole ownership after divorce, the property must be transferred. The process by which this is accomplished is called deeding. But not all deeds are created equal. Read on for a quick primer on the difference between a warranty deed and a quitclaim deed, the two most common conveyances.
A warranty deed is what people typically think of when selling a property. It is a piece of paper that has been signed by the property owner and recipient. It essentially states that the former has no outstanding liens or claims against the property that would encumber the purchase or future rights of ownership. Bankrate notes that title insurance, which is required in most traditional real estate sales transactions, protects the buyer from false information given on the warranty deed. A warranty deed may be written as a special warranty deed, which warrants only the history of the property from the time the current titleholder acquired ownership; a regular warranty deed guarantees a free and clear title in reverse perpetuity.
A quitclaim deed comes into play when the property being transferred is done so without compensation. For example, your grandfather dies and leaves his home to you. You are not buying the property but inheriting it. A quitclaim deed would be issued. A quitclaim does not warranty against liens against the property. This type of deed is issued under the assumption of an existing relationship between giver and recipient and the recipient trusts that the giver holds interest in the subject property. Quitclaim deeds are useful during divorce proceedings as they are usually executed much faster and are less expensive than warranty deeds. It is important to note that a quitclaim deed only transfers interest of property and does not release any party from financial liability relating to the property. Filing for a quitclaim deed
Unlike a warranty deed, a quitclaim deed doesn’t take considerable time or research related to the history of the home/property. Redfin explains that quitclaim deed requirements are, however, different from state to state and suggests consulting with an attorney prior to obtaining the necessary forms.
Deed and Title
Deeds and titles are not the same thing, although one cannot exist without the other. A deed is a legal document; a title refers to the legal rights a person has over property being transferred via deed. An easy way to compare the two is by thinking of a deed as a marriage license. It’s a piece of paper that says two people intend to marry and may legally do so; the title is the state of being wed and is more of an abstract concept, just as you cannot see a marriage. The marriage (title) exists because the license (deed) says neither party is incapable of the act due to an existing marriage (lien).
Other types of deeds
While warranty and quitclaim are most used, there are several other types of deed. These include bargain and sale, similar to a quitclaim but involves the transfer of money and is often associated with seized properties; grant, guarantees property is free of debts but not defects; and court-order deed, a deed created without the consent of the owner, often when they are incapable of paying for the property.
When buying a home on the market, a warranty deed is always the way to go. Special circumstances, such as divorce, may be best suited to a quitclaim deed, especially when the property was acquired during the marriage. Either way, a deed transfers title but only a warranty deed ensures that title won’t be compromised due to past defects.