Deeds Convey Property in Different Ways
Whether you are selling your home, bequeathing it to a child, or taking sole ownership after
divorce, the property must be transferred. The process by which this is accomplished is called
deeding. But not all deeds are created equal. Read on for a quick primer on the difference
between a warranty deed and a quitclaim deed, the two most common conveyances.
A warranty deed is what people typically think of when selling a property. It is a piece of paper
that has been signed by the property owner and recipient. It essentially states that the former
has no outstanding liens or claims against the property that would encumber the latter’s
purchase or future rights of ownership. Bankrate notes that title insurance, which is required in
most traditional real estate sales transactions, protects the buyer from false information given on
the warranty deed. A warranty deed may be written as a special warranty deed, which warrants
only the history of the property from the time the current titleholder acquired ownership; a
regular warranty deed guarantees a free and clear title in reverse perpetuity.
A quitclaim deed comes into play when the property being transferred is done so without
compensation. For example, your grandfather dies and leaves his home to you. You are not
buying the property but inheriting it. A quitclaim deed would be issued. A quitclaim does not
warranty against liens against the property. This type of deed is issued under the assumption of
an existing relationship between giver and recipient and the recipient trusts that the giver
actually, holds an interest in the subject property. Quitclaim deeds are useful during divorce
proceedings as they are usually executed much faster and are less expensive than warranty
deeds. It is important to note that a quitclaim deed only transfers interest of a property and does
not release any party from financial liability relating to the property, according to SFGate. Filing for a quitclaim deed
Unlike a warranty deed, a quitclaim deed doesn’t take considerable time or research related to
the history of the home/property. Redfin explains that quitclaim deed requirements are,
however, different from state to state and suggests consulting with an attorney prior to obtaining
the necessary forms.
Deed and title
Deeds and titles are not the same thing, although one cannot exist without the other. A deed is
a legal document; a title refers to the legal rights a person has over property being transferred
via deed. An easy way to compare the two is by thinking of a deed as a marriage license. It’s a
piece of paper that says two people intend to marry and may legally do so; the title is the state
of being wed and is more of an abstract concept, just as you cannot see a marriage. The
marriage (title) exists because the license (deed) says neither party is incapable of the act due
to an existing marriage (lien).
Other types of deed
While warranty and quitclaim are most used, there are a number of other types of deed. These
include bargain and sale, similar to a quitclaim but involves the transfer of money and is often
associated with seized properties; grant, guarantees property is free of debts but not defects;
and court-order deed, a deed created without consent of the owner, often when they are
incapable of paying for the property.
When buying a home on the market, a warranty deed is always the way to go. Special
circumstances, such as divorce, may be best suited to a quitclaim deed, especially when the
property was acquired during the marriage. Either way, a deed transfers title but only a warranty
deed ensures that title won’t be compromised due to past defects.