What’s In A Deed?
Did you know there are different types of deeds? And the type of deed you grant to someone affects your obligations to him in the future? And the type of deed you receive as a grantee dictates what you actually receive in the deed? Depending on the type of deed you hold for your property, the prior owner may or may not have made you promises regarding the title to your property – including whether he actually even owned it when he deeded it to you. If you have an issue with your property’s title in the future, the promises made in your deed may help you or hurt you down the road.
So, what types of deeds are there and why does it matter what type of deed you receive as a new owner?
The most desirable type of deed for a new owner to receive is a General Warranty Deed. In a General Warranty Deed, the prior owner makes six covenants – or promises – with the new owner. The owner, or grantor, promises that:
- she has lawful ownership of the property;
- she has the right to convey the property;
- the property is free from former mortgages, judgments, executions, and other encumbrances;
- the new owner will have peaceful ownership of the property;
- the new owner will have quiet possession of the property and will not be disturbed by anyone who has claims against the property; and
- she will reasonably correct any defect in the title.
The second type of deed is a Limited Warranty Deed or a Special Warranty Deed. In a Limited Warranty Deed, the owner only makes two promises to the new owner:
- the property is free from encumbrances made by him; and
- that he will defend the new owner against anyone who tries to claim the property through him.
The third type of deed is a Quit Claim Deed. In a Quit Claim Deed, the owner is simply granting to the new owner whatever interest he or she holds in the property. This literally means that the new owner gets whatever the prior owner owns – if he owns no interest in the property and signs a Quit Claim Deed to you, you now own no interest in the property. In a Quit Claim Deed, the prior owner makes no promises, including whether she even owns the property at all.
There are appropriate circumstances for each type of deed. The next time you buy or sell property, you will probably pay closer attention to the type of deed you are signing or receiving if you are transferring property.