What is a property deed?
A property deed is a legal document that transfers property from a seller to a buyer. The seller is called the “grantor” and the buyer is called the “grantee.” The deed includes a description of the property (its formal legal description) and provides specific information about the type of conveyance. Some deeds also reference the consideration (often money) exchanged for the purchase of the property.
This physical document will provide information about who holds title to the property. It may not be the only document that shows title, but it is a critical piece to prove who owns a property. A property deed is filed with a government office in the county in which the property is located to become effective, usually the assessor’s office.
What is a property title?
A property title is a legal term that represents ownership of a property. While property title is represented by several legal documents, including a deed and tax records, property title itself is not technically a legal document. Instead, property title is the overall concept of ownership, including all of the rights and responsibilities that having title for something involves.
When someone has title to a property, they have certain legal rights. This bundle of rights include:
- Possessing the property.
- Using and maintaining the property.
- Renting or transferring the property.
- Enjoying the property.
- Limiting who can come onto the property or use the property.
These rights of ownership can be limited by applicable laws and agreements, such as mortgage holders or homeowners’ association requirements. However, the ultimate right to the property belongs to whoever has title to the property.
The overall concept of “title” is extremely important because it sets out who legally owns the property. When there is a question about ownership, there may be a “cloud on the title.” This “cloud” can lead to an array of legal issues. Instead, new owners want a house deed that has a clear title.
Chain of Title
Chain of title refers to the history of transfers for a property, including all the prior owners transferring their rights and obligations relating to the property to the next person. The chain of title is important because the grantor ahead of the current owner can only transfer whatever rights they have in the property to the next person. If, for example, their property rights were subject to an easement, that easement may transfer to the next owner.
Title Disputes
A title dispute refers to a question about who owns the property or the extent of the ownership. It can include situations where ownership is subject to another person’s rights or where someone questions whether the title holder has any rights to the property at all. A title dispute might happen as a result of a simple real estate transfer, or it can crop up in the context of an estate or trust administration.
Title Insurance
Title insurance is an insurance product that buyers or mortgage companies will use to help avoid the risk of purchasing a property that will be subject to a later title dispute because it has title defects. A title company will examine the title to a property by doing a title search through public records to determine whether there are any risks associated with the chain of title. Then, they will provide a policy to a new property owner or their mortgage company to assist with any title disputes that might arise in the future.
Keep in mind that if a mortgage company or lender purchases title insurance, they are protected, but the buyer (the owner and borrower) does not get to share that protection. If you want protection from title insurance, you will generally need to purchase your own policy.
What are the different types of property deeds?
While all property deeds accomplish the same goal—transferring the property—general categories of deeds transfer property slightly differently. There are four categories of property deeds.
General Warranty Deed
A general warranty deed (or just warranty deed) is the most common type of deed, particularly in residential real estate transactions. It transfers the property to another person but also provides a “general warranty” or guarantee that the seller has all rights and title to the property. They warrant that the seller actually owns the property and that the property is free of liens, easements, mortgages, or other barriers to the unburdened use of the property.
The general warranty deed is the best possible deed option for a buyer because, in addition to the seller’s guarantee that they own the property, this type of deed comes with an extra perk. If there is a problem that arises with the property’s title, then the grantor (seller) must defend the title. For example, if an heir disputes ownership after the buyer purchases the property, the seller must come back and clean up this dispute for the buyer.
Specific Warranty Deed (Grant Deed)
A specific warranty deed is similar to a general warranty deed. It is also sometimes called a grant deed, limited warranty deed, or special warranty deed. These deeds are more limited but still show legal ownership. A general warranty deed guarantees ownership both before the seller’s ownership and during the ownership. On the other hand, a specific warranty deed only warrants that the seller did not encumber (or burden) the property while they owned it.
Essentially, in a specific warranty deed, a seller states that they did not put in any liens on the property, but there might be liens on the property from a time before they purchased the property. This type of deed is much more commonly used to buy commercial property.
Quitclaim Deed
A quitclaim deed simply transfers a property from the seller to the buyer. It does not provide any warranties. It transfers all rights and obligations that the previous owner has in the property to the buyer, with encumbrances, potential ownership disputes, and anything and everything else.
A quitclaim deed is far more beneficial to the seller than to the buyer. Because the seller only transfers whatever rights they have, it is possible that the seller has no rights in the property at all. If that happens, the buyer’s purchase may be worthless.
Quitclaim deeds are not often used between third parties because the buyer wants the warranty that comes with a general warranty deed. Instead, they might be used among family members or between an individual and an entity they own. A quitclaim deed might also be used to clean up a potential title dispute or error.
Special Purpose Deed
A special purpose deed is a “catch-all” category of deeds that often arises out of statute or rule. Below are just a few examples of special-purpose deeds.
- Sheriff’s Deed: A deed from the sheriff to a buyer when the buyer purchased the property at a sheriff’s sale, often due to a foreclosure.
- Tax Deed: A deed from a tax authority when the buyer purchases the property because of a tax sale caused by delinquent property taxes.
- Administrator’s Deed: A deed from an administrator who is transferring property from a deceased person’s estate.
- Deed in Lieu of Foreclosure: A deed that is provided to a financial institution to avoid foreclosure, often because they have fallen behind on payments.
These special purpose deeds essentially have the same effect as a quitclaim deed, but they are not generally provided from a seller to a buyer. Instead, they are often (but not always) from a third party to a buyer.
How can I protect my rights when buying or selling property?
Buying and selling real estate is a big deal—the home-buying process is often one of the largest transactions that individuals will go through during their lifetime. As a result, it is especially important that you work through this process properly. That involves completely documenting the sale, doing your research, and getting professional help when you need it.
You will need a bill of sale, a properly drafted deed, and several other documents based on your geographic location. You may want to consult with a real estate agent in your area. You can also reach out to a Rocket Lawyer network attorney who handles real estate matters to get affordable legal advice and help with your specific situation.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
