Property deeds are nothing but legal documents that are used in real estate that transfer ownership of real property from a grantor (seller) to a grantee (buyer). Real property is land or any entity linked to the land, like buildings or roads. For a deed to be legally functioning, it must contain the identification of the grantor and grantee and a sufficient description of the property.
More precisely, deeds fall into several types, comprising warranty, quitclaim, and special purpose. This blog will define what deeds are, what needs to be comprised in a deed to make it legally operational, and the diverse types of deeds that are used in the transfer of real property.
Historically, real property was moved through a ceremonial act referred to as "livery of seisin." In this act, the person moving the land handed over a twig or clod of turf from the land to the individual taking delivery of the land. A verbal or written statement mostly accompanied the gesture, however, it was the livery of seisin that legally transferred the title to the property. Now, the title to real property is conveyed by a paper deed.
Deeds are also official, implying that they are executed as an outcome of a court or legal ruling, or more usually, private, meaning they are executed by a deal struck amongst individuals or businesses.
Critical Deed Elements
While each state has its necessities, the majority of deeds must contain several critical elements to be legally valid:
- They must be in writing. While the majority of deeds are completed on printed forms, there is no legal constraint that any particular form is used as long as the essential elements are comprised.
- The grantor must possess the legal capacity to transfer the property and the grantee must be capable of receiving the grant of the property. A person who is fit to make a valid contract is regarded as competent to be a grantor.
- The grantor and grantee must be recognized in such a way as to be ascertainable.
- The property must be sufficiently described.
- Operative words of conveyance must exist. All standard form deeds contain the necessary legal language that essentially transfers the property.
- The deed must be signed by the grantor or grantors in case the property is owned by more than one individual.
- The deed must be legally conveyed to the grantee or someone acting on the grantee's behalf.
- The deed must be acknowledged by the grantee. Usually, deeds are accepted by the grantee but in definite circumstances, the grantee could reject delivery of the deed.
Types of Deeds
Deeds can be categorized in several ways. Generally, deeds are categorized as official or private. Official deeds are implemented under court or legal proceedings. Most property transactions, though, contain individuals and business entities using private deeds.
Deeds are also characterized based on the type of title warranties offered by the grantor. The different types of deeds are as follows:
General Warranty Deed
The general warranty deed bids the grantee the utmost protection. With this type of deed, the grantor makes a series of legally binding promises (called covenants) and warranties to the grantee (and their heirs) agreeing to safeguard the grantee alongside any prior claims and demands of all persons whomsoever in regards to the conveyed land. The usual covenants for title involved in a general warranty deed are:
- the covenant of seisin, denoting that the grantor warrants they possess the property and has the legal right to transfer it
- the covenant against encumbrances, signifying that the grantor warrants that the property is free of liens or encumbrances, excluding as specifically stated in the deed
- the covenant of quiet enjoyment, signifying that the grantee will have quiet possession of the property and will not be troubled because the grantor had a defective title
- the covenant of further assurance, where the grantor assures to deliver any document necessary to make the title good
Special Warranty Deed
Whereas in a general warranty deed the grantor assures to warrant and defend the title carried out against the claims of all persons, the grantor of a special warranty deed warrants that they acknowledged the title to the property and that they have not done anything while holding the title to create a defect.
In other words, only defects that arose during the grantor's ownership of the property are warranted. Because of this restraint, the special warranty provides the grantee less protection than the general warranty deed. Several purchasers of real estate will assert on a general warranty deed to guard against problems that could arise as a consequence of a special warranty deed.
The quitclaim deed, also called a non-warranty deed, offers the grantee the least amount of protection. This type of deed conveys whatever interest the grantor currently has in the property—if any. No warranties or promises regarding the quality of the title are made. If the grantor has a good title, the quitclaim deed is essentially as effective as a general warranty deed. However, if the title contains a defect, the grantee has no legal recourse against the grantor under the deed. A quitclaim deed is often used if the grantor is not sure of the status of the title (if it contains any defects) or if the grantor wants no liability under the title covenants.
Special Purpose Deeds
Special purpose deeds are often used in association with court proceedings and cases where the deed is from a person acting in some type of official capacity. Utmost special purpose deeds offer little to no protection to the grantee and are quitclaim deeds. Types of special purpose deeds contain but are not restricted to:
- Administrator's Deed: This may be used when a person dies intestate (sans a will). A court-appointed administrator will organize the decedent's assets and an administrator's deed may be used to carry the title of real property to the grantee.
- Executor's Deed: This may be used when a person dies testate (accompanied by a will). The estate's executor will dispose of the decedent's assets and an executor's deed may be used to convey the title or real property to the grantee.
- Sheriff's Deed: This is given to the positive bidder at an execution sale held to gratify a judgment that has been acquired against the owner of the property. The grantee accepts whatever title the judgment debtor has.
- Tax Deed: This is issued when a property is traded for delinquent taxes.
- Deed in lieu of Foreclosure: This is agreed by a borrower who is in default on a mortgage directly to the lender. This serves to avoid foreclosure proceedings, and if the lender agrees to take the deed instead of foreclosure, the loan is terminated. Many lenders favor foreclosing to clean up the title.
- Deed of Gift (Gift Deed). This is used to convey the title on real property that is given for no contemplation or only a token consideration. In the near states, the gift deed must be recorded within two years or it becomes void.
The Bottom Line
The transfer of a property's title is carried out by a deed. Specific key elements must be confined within the deed for it to be legally operative. Diverse deeds offer varying levels of protection to the grantee and the compulsions of a grantor are determined by the form of the deed. Since deeds are significant legal documents that affect ownership interests and rights, a competent real estate attorney should be consulted in any transaction involving them, such as the closing of a home purchase.
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