Land ownership has long been a significant part of the American dream. To the country’s earliest settlers, property was a prized possession signifying both status and security. Even today, many American families have a deep desire to own their own property and have a place they call home. That’s why it’s critical to know the ins and outs of property deeds and other real estate law matters—or to have someone on your side who does. You can better protect what’s yours and ensure smoother transactions when you’re buying or selling.
In the U.S., the details of property ownership are recorded for every piece of land, usually within the residing county or state. This information is open and available to the public. And when it comes to transferring property ownership, there are specific legal documents to be created and proper steps to take for filing. That’s where deeds come in.
Deeds: What are they and why do they matter?
A deed is a legal document detailing the transfer of ownership of real estate or property from one party to another. It’s essentially proof of the transfer. A deed is required in all kinds of situations, including when you buy a home, inherit property, or even just want to add your spouse to your home’s title. At a minimum, a deed must contain the following:
- Signature of the current owner of the property (the Grantor)
- A legal description of the property
- The tax mailing address
- Name of the person who the property is being transferred to (the Grantee)
There are several types of common deeds. Although they have similar functions, they have significant differences that can cause major headaches if overlooked or misunderstood.
The most common form of deed, a warranty deed, is used in most purchase and sale transactions. It offers the best protection for the Grantee because it guarantees that the Grantor is the rightful owner and has a legal right to transfer the title. The Grantor warranties, or guarantees, that the property is free of debts, liens, encumbrances, and claims of third parties. If a claim is presented after the warranty deed has been executed, the Grantor, not the current owner, can be held legally responsible for any damages or collection actions. This title offers the most protection for the Grantee against title challenges and other problems that might arise.
Quit Claim Deed
A quit claim deed (often mistakenly called a “quick” claim deed) transfers ownership interest of the Grantor to the Grantee without any warranties or guarantees. The Grantor has zero obligation to defend the title in the event of any future claims, liens, or encumbrances. A quit claim deed is often used in family-related transfers, such as conveying property as a gift or to a spouse. While quit claim deeds work well in special circumstances, the use of these types of deeds can signal problems or issues surrounding the property.
Special or Limited Deed
In this case, the Grantor only warrants that there are no title defects during the time they owned the property. This type of deed offers the Grantee greater protection than a quit claim deed but less protection than a full warranty deed. These often originate as compromises in real estate transactions, giving some guarantees but not others.
Making Sure You’re Protected
Nobody wants a nasty surprise after buying or selling property. And since deed types and ownership can impact both the value of a property and liability, they are worth some professional time and attention. It’s easy to overlook these types of details at closing, and that can cause major problems down the road.
Thinking about buying or selling property? We can help ensure a smooth transaction and long-term outcomes. We prepare deeds and can also determine what specific type of deed and ownership makes sense in your situation before a purchase is made. This is critical, because once a deed type is chosen, it can’t be undone. At BB&C, we can help you avoid pitfalls and make the savvy real estate decisions that will benefit you in the long haul.
Reach out to me, Cecelia Neihouser Harper, at 765-637-9175 if we can help in any way.
The content of this blog is intended to be general and informational in nature. It is advertising material and is not intended to be, nor is it, legal advice to or for any particular person, case, or circumstance. Each situation is different, and you should consult an attorney if you have any questions about your situation.