Types of Property Deeds: Warranty, Grant, and Quitclaim
Understand the Deed You're Signing
Property deeds are legal instruments that assign the ownership of real estate property and transfer the title to land and its improvements, such as a house. Words used to convey property transfer can include grant, assign, convey, or warrant, but they basically all do the same thing: They transfer the interest of the person relinquishing or selling the house to the person who's buying or acquiring it.
Grantor Books and Grantee Books
You can look up the history of all property deeds if you go to your county courthouse or to the clerk's office where deeds are recorded. You can check on other matters that can affect title as well, such as loans against properties and releases of those loans.
All these records are typically contained in a lot of very large, heavy books. Transfers are recorded electronically, but all titles are still recorded and saved in these property record books.
There are two types of property record books, Grantor and Grantee. Those that contain records about the seller are the Grantor books. The books containing buyer information are Grantee books. Sometimes, these two records will be commingled.
The grantor is the person or entity who is selling or transferring the property. The grantee is the person or entity who is buying or accepting the property.
Grant deeds contain two guarantees. First, the grantor states that the property has not been sold to anybody else. Secondly, it states the property is not burdened by encumbrances—apart from those the seller has already disclosed to the buyer.
Grant deeds do not have to be recorded to be valid, nor do they have to be notarized. Most sellers do ask a notary to witness the deed, however, acknowledging that the seller is indeed the person who signed the deed. And most buyers want the protection of recording the deed to give "constructive notice to the world" that the property has been sold.
State laws can differ, but a grant deed must typically contain six essential elements to be valid:
- It must be a written document.
- It must include a clause that transfers title, called a granting clause.
- It must state the names of the grantor and the grantee.
- It must include a description of the property that's being transferred.
- A competent grantor must sign it. This requirement excludes minors, and those who have been declared incompetent cannot sign a deed.
- It must be given to the buyer while the seller is still alive, and the buyer must accept it.
- It must bear the grantor's signature.
Warranty deeds are used all over the United States, but they're most common in the Midwest and Eastern states. They're very similar to grant deeds, with one exception. Grant deeds contain two guarantees, but warranty deeds contain three.
The grantor states that the property has not been sold to anybody else and they will warrant and defend the title against the claims of all persons. Further, the grantor declares that the property is not burdened by any encumbrances apart from those issues about which the seller has already told the buyer.
In essence, the grantor guarantees the grantee that title is free of any defects that may affect the title—even if the defect was caused by a previous owner.
Quitclaim deeds are used to convey any interest that the grantor might possess in the property. The grantor might be a legal owner—or not. The deed makes no promises in that regard.
Quitclaims are often used in divorce situations to deed a marital property from one spouse to another. If a married person holds the title to a property as its sole and separate owner—such as if they acquired the property before marriage—the spouse who is not in the title might be asked to sign a quitclaim deed to ensure that they don't later try to lay claim to the property.
Other Types of Deeds
When property taxes go unpaid, and the property is sold for the payment of those back taxes, a tax deed is typically used to convey title to the buyer. The number of delinquent years can vary from state to state.
The exchange of money or consideration is generally referred to as "love and affection" in a gift deed, meaning the property is transferred without payment. Gift deeds are generally used to transfer titles among people who are related to each other.
Homeowners who are behind in payments to the lender will sometimes negotiate a deed in lieu of foreclosure. The homeowner deeds the property over to the lender to avoid foreclosure, but the deed can still show up on their credit report.
For more information concerning property deeds and their legal ramifications, please contact a local real estate lawyer.