When you are purchasing real estate, you will hear a number of terms thrown around whose definition may seem one and the same. Most people tend to assume that Warranty Deeds and Titles are the same legal article, but they actually refer to two separate legal concepts. The ownership of a property is transferred via a Deed. There are different types of deeds: general warranty deed, special warranty deed, bargain and sale deed and quitclaim deed.When you own a property in its entirety, you will possess both the Deed and the Title. The two are not the same and mixing the two up can cause problems if you don’t know what you’re using.
Title to real estate means the right to or ownership to something like land or property. Title is the legal way of saying you own a right to something. For real estate purposes, title refers to ownership of the property, meaning that you have the rights to use that property. It may be a partial or full interest in the property. With title you can access the land and potentially modify it as you see fit as long as it doesn’t interfere with local zoning or Deed Restrictions. Title also means that you can transfer that interest or portion that you own to others. However, you can never legally transfer more than you own.
Deed is an evidence of title. Deed is a legal documents that conveys or transfers title to real estate from one person or entity to another. The owner is referred to as the grantor, and the person who receives title si called the grantee. The deed is executed or signed only by the grantors. The grantee does not need to sign the deed. It must be a written document, according to the Statute of Frauds. Sometimes the Deed is referred to as the vehicle of the property interest transfer. The transfers can be less than the title that you actually have. Deeds must be recorded in the courthouse or assessor’s office to make them fully binding in most states, but a failure to file them does not change the transfer of title. It just means that the Deed is not perfected. An imperfect Deed does not mean that there is a problem with the title. It’s just a problem with the way that the paperwork surrounding the Deed was handled.
General Warranty Deed
This is the most common deed as it provides the greatest level of protection than any other deed giving the grantee the highest level of protection. The grantor is bound by certain basic warranties:
- Covenant of seisin: The grantor claims to be the legal owner and hence has the legal right to convey the property.
- Covenant against encumbrances: The grantor warrants that the property is free from liens or encumbrances.
- Covenant of quiet enjoyment: The grantor guarantees that the title is good against third party claims.
- Covenant of further assurance: The grantor warrants to correct any title mistakes by re-issuing the title.
- Covenant of Warranty forever: The grantor guarantees compensation for future failure of title for any reason.
Special Warranty Deed
The special warranty deed transfers title to a property with limited warranties. There are two warranties the grantor provides here. The grantor warrants that 1. the title has been received by the current owner and 2. that there are no encumbrances.
Bargain and Sale Deed
Bargain and sale deeds are used in foreclosures and tax sales. This deed implies that the grantor holds title to the property and can convey it to a grantee but makes no guarantees against encumbrances. However, the grantee can request general warranty covenants to be amended to this deed.
The quitclaim deed provides no protection or warranties rather it mere releases an interest in the property to the grantee. A quitclaim deed is frequently used in divorces to convey ownership from the couple to one spouse or vice versa in marriages to convey ownership from one spouse to husband and wife. They are also used to cure title defects, called cloud on a title for example to correct someone’s name on the title.