Several different kinds of deeds can be used to transfer property ownership. The extent to which the seller pledges or covenants specific facts concerning the status of the property is the primary factor that differentiates these various forms of deeds.
Therefore, the level of protection afforded to the buyer is contingent upon the kind of deed used to close the deal. You must thoroughly understand these distinctions to guarantee that the correct deed is carried out under each circumstance.
Deeds—In a Nutshell
Let’s start with a fundamental knowledge of what a deed is and what it does before we describe the many kinds of deeds.
The document required to transfer property ownership from one person to another is called a deed. If you want to buy real estate, sell real property, or transfer real property to another person, you will require this paperwork. Remember that the deed itself is only a method of transferring real property; it is not “title,” nor does it generate title in real property.
The term “title” refers to an individual’s legal ownership rights concerning a piece of property (whether real or personal). Even though the title will be reflected in the deed, it does not generate a title on its own. The Grantor’s title is the only one the deed can transfer; for instance, it can only be a fee interest, a life estate, or even no title.
Let’s look at deeds in a bit more detail now that we have a fundamental understanding of what they are.
Types of Deeds
You must be familiar with the types of deeds and how they affect your home to buy or sell your property. This is true regardless of the course of action you are pursuing to buy or sell your property.
General Warranty Deed
A Warranty Deed offers a full warranty of title that covers the entire title chain, beginning when the Grantor or seller did not possess the land and continuing to the present day. The General Warranty Deed is the most typical deed to transfer residential property.
The deed form is most likely present at the closing table of a residential property acquisition or sale. The standard Warranty Deed is regarded as the most advantageous form of ownership documentation for real estate.
Special Warranty Deed
The Special Warranty Deed, much like the General Warranty Deed, transfers fee simple title and includes the same five title covenants as the General Warranty Deed. This is one of the key differences between the two types of deeds. Applying five title covenants is restricted in the Special Warranty Deed to the period during which the seller held the property.
Quit Claim Deed
A property can be transferred using this deed, but the Grantor does not need to provide any covenants or guarantees regarding the property. Because this deed affords the Grantee the least protection possible, it is most commonly utilized in situations where the parties involved have already established a relationship.
It is standard practice to utilize quitclaim deeds when transferring property to members of one’s own family, to a revocable living trust, to an ex-spouse as part of the terms of a divorce settlement, or to a corporate legal company. They are also frequently used to repair title flaws, such as correcting a scrivener’s inaccuracy in the legal description of a property.
Fee Simple Deed
The seller conveys fee simple title when using a Fee Simple Deed, just as they do when using Warranty Deeds and Special Warranty Deeds. However, unlike the two other deeds, the seller does not provide any warranties or covenants of the title when using a Fee Simple Deed; rather, the seller simply conveys the fee simple title.
As a result, the Fee Simple Deed does not contain guarantee clauses or title covenants.
Specialized Deed
A specialized deed, also known as a corrective personal representative deed, is distinguished from other types of deeds as it focuses on the person executing the deed rather than the deed itself.
This deed may be categorized as a special warranty deed, a general deed, or a quit claim deed. All three deed types provide the buyer with varying levels of assurance. The property transfer through the will of a property owner who has passed away is referred to as a corrected personal representative deed. This type of transfer is also referred to as a testate deed.
Wills can be utilized as tools for estate planning to facilitate the distribution of an individual’s property after passing away. If the property owner passes away after having a will drawn up that specifies who will inherit the property or how it will be distributed, the estate in question is referred to as a “testate.”
Lady Bird Deed
Also called the Enhanced Life Estate Deed—the Lady Bird Deed is a type of real estate document that enables the Grantor to keep full ownership rights to their home while they are still alive. When the Grantor passes away, the residence instantly avoids the probate process and is transferred to the relatives named on the deed. Know that a Grantor is permitted to alter their mind (as frequently as they wish) on who will inherit the property when they pass away.
For instance, the Grantor signs this kind of deed and then names two of their children as the recipients of the property after they have passed away. However, many years later, the Grantor changes their mind, and they end up listing different relatives on the deed.
The property is then transferred to the newly listed relatives without the present Grantee signing any documents or agreeing to the change. This occurs whether or not the current Grantee is aware of the change.
Bottom Line
Real estate purchases are frequently very difficult endeavors. If you want to ensure that your rights are protected throughout the process, it is a good idea to consult a professional deed preparation attorney like the ones at Easler Law so that you know the documents you are signing. This will ensure that your rights are protected.