TYPES OF DEEDS
As we previously discussed, a deed is a legal document that states the title a person or people have with regard to a certain piece of property. However, there is often confusion over the different types of deeds and the legal ramifications related to each of them. All types of deeds transfer titles or interests in real property, but the types of warranties granted by the deeds differ.
By its legal definition, a warranty is a promise that something (in furtherance of a contract) is guaranteed by one of the contractors. It is a promise that something is being sold as promised or represented. In this case, that something is real property (your house), and that promise relates to title (the legal rights related to your house). As a refresher, title means the legal right of ownership and the specific rights a person has to own or possess a piece of property.
In real estate, there are three (3) basic types of deeds that all convey different warranties.
Quit-claim Deed
One of the most common types of deed you will encounter is the quit-claim deed. In a quit-claim deed, a grantor (usually the buyer) makes no warranties as to the title they possess, the quality of past title, or the existence of any interest in the property that they may have. Just picture a seller saying, “I don’t know what interest, if any, I have in this property, but any interest I do have I give to you.” Obviously, a buyer would prefer warranties so that if any issues with title present themselves later on down the road, the buyer could require the seller fix these problems. It is very common for a title insurance company to decline title insurance when title is transferred by a quit claim deed.
A common type of quit-claim deed that our clients regularly ask us to prepare are “lady bird deeds.” A lady bird deed, allegedly named after former President Lyndon B. Johnson’s wife, Lady Bird Johnson, since it is believed that President Johnson transferred some of his property using this type of deed, is an “enhanced life estate deed.” An enhanced life estate deed transfers real estate to any number of beneficiaries and avoids the need for probate. In this situation a grantor of interests in real estate retains control over the real estate while they are alive. However, the life tenant also has the right to mortgage or sell the real estate without the consent of any other interest holders. In comparison, a standard life estate deed transfers ownership of a property prior to death, but the owner cannot mortgage or sell the home without the permission of the other interest holders.
Special Warranty Deed
A bargain and sale deed is a deed most common amongst developers that convey property to new homeowners. These types of deeds are sometimes referred to as limited warranty deeds. In special warranty deeds, the grantor makes only one promise; he/she promises that they did nothing to create any issues with title. However, the grantor makes no warranty that title prior to the grantor’s ownership is good and marketable.
Statutory Warranty Deed
The last type of deed is the Statutory Warranty Deed. This type of deed is very common when you purchase homes through an institutional lender. It is the best assurance a grantor can make to a grantee. Here, the grantor makes the promise that both past and present title are good and marketable and may be conveyed without any barriers. If there are any issues with the title, the grantee can have recourse against the grantor if title problems are found.
This is a broad overview of the types of deeds that effect real estate transactions. At J. Perez Legal P.A., we have over twenty years serving Broward County residents in their real estate transactions as both real estate attorneys and title processors. Please call (954) 450-2585 today to schedule a consultation with experienced real estate attorneys. J. Perez Legal P.A. handles a variety of cases, so call now if you have any other questions related to real estate including mortgage, foreclosure, modification, etc.
By its legal definition, a warranty is a promise that something (in furtherance of a contract) is guaranteed by one of the contractors. It is a promise that something is being sold as promised or represented. In this case, that something is real property (your house), and that promise relates to title (the legal rights related to your house). As a refresher, title means the legal right of ownership and the specific rights a person has to own or possess a piece of property.
In real estate, there are three (3) basic types of deeds that all convey different warranties.
Quit-claim Deed
One of the most common types of deed you will encounter is the quit-claim deed. In a quit-claim deed, a grantor (usually the buyer) makes no warranties as to the title they possess, the quality of past title, or the existence of any interest in the property that they may have. Just picture a seller saying, “I don’t know what interest, if any, I have in this property, but any interest I do have I give to you.” Obviously, a buyer would prefer warranties so that if any issues with title present themselves later on down the road, the buyer could require the seller fix these problems. It is very common for a title insurance company to decline title insurance when title is transferred by a quit claim deed.
A common type of quit-claim deed that our clients regularly ask us to prepare are “lady bird deeds.” A lady bird deed, allegedly named after former President Lyndon B. Johnson’s wife, Lady Bird Johnson, since it is believed that President Johnson transferred some of his property using this type of deed, is an “enhanced life estate deed.” An enhanced life estate deed transfers real estate to any number of beneficiaries and avoids the need for probate. In this situation a grantor of interests in real estate retains control over the real estate while they are alive. However, the life tenant also has the right to mortgage or sell the real estate without the consent of any other interest holders. In comparison, a standard life estate deed transfers ownership of a property prior to death, but the owner cannot mortgage or sell the home without the permission of the other interest holders.
Special Warranty Deed
A bargain and sale deed is a deed most common amongst developers that convey property to new homeowners. These types of deeds are sometimes referred to as limited warranty deeds. In special warranty deeds, the grantor makes only one promise; he/she promises that they did nothing to create any issues with title. However, the grantor makes no warranty that title prior to the grantor’s ownership is good and marketable.
Statutory Warranty Deed
The last type of deed is the Statutory Warranty Deed. This type of deed is very common when you purchase homes through an institutional lender. It is the best assurance a grantor can make to a grantee. Here, the grantor makes the promise that both past and present title are good and marketable and may be conveyed without any barriers. If there are any issues with the title, the grantee can have recourse against the grantor if title problems are found.
This is a broad overview of the types of deeds that effect real estate transactions. At J. Perez Legal P.A., we have over twenty years serving Broward County residents in their real estate transactions as both real estate attorneys and title processors. Please call (954) 450-2585 today to schedule a consultation with experienced real estate attorneys. J. Perez Legal P.A. handles a variety of cases, so call now if you have any other questions related to real estate including mortgage, foreclosure, modification, etc.