Simply put, a deed is the document that transfers ownership of real estate. In the United States you cannot transfer real property without having something in writing and the most common instrument used to do this is a deed.. A real estate deed is broken up into several parts the most common of which are as follows:

The Premises opens the document with the basic details of the property and the parties exchanging the property. This is also known as the granting clause and names the Grantor (person selling) and Grantee (person receiving).

  • The Redendum is the part of the deed in which the Grantor may retain something from the transferred property such as a life estate.
  • The Conditions of the deed are the terms that must be completed in order for the deed to be valid. Normally it states “For good and valuable consideration received….”
  • The warranty of the deed is where the Grantor warrants or promises to defend the title either in full or in part.
  • The covenants are a series of promises made by the grantor to the grantee.
  • The last part of the deed is the conclusion.

A deed grants a type of showing that you own the property or home that is described in the legal description on the deed. It can also mean that while someone else might be living on the land and have possession of it, you are the legal owner with the right to sell or convey the property To insure the world at large is aware of this your deed is normally recorded in the county clerk’s office where the property resides. However, a deed does NOT have to be physically recorded to be in full force and effect. So long as all of the proper requirements have been met to create the deed it is a valid legal document the moment it is transferred to the Grantee, whether that person ever chooses to record it with the court or not.

Here’s a brief rundown of the most common types of deeds:

A quitclaim deed transfers whatever ownership interest a person has in a property. It makes no guarantees about the extent of the person’s interest. Quitclaim deeds are commonly used by divorcing couples; one spouse signs all his or her rights in the couple’s real estate over to the other. This can be especially useful if it isn’t clear how much of an interest, if any, one spouse has in property that’s held in the others name. (However, a quitclaim deed doesn’t relieve the individual transferring ownership from the mortgage, if there is one.)

A warranty deed transfers ownership and explicitly promises the buyer that the Grantor has good and valid title to the property, meaning it is free of all liens or claims of ownership. The Grantor guarantees that he or she will compensate the buyer if that turns out to be wrong. The warranty deed may make other promises as well, to address particular problems with the transaction such as governmental easements or any remaining estate still on the property that prevents it from being transferred as a fee simple property.

A special warranty deed is not nearly as protective of the Grantee the general warranty deed. The grantor of a special warranty deed conveys the property with two warranties:

  1. The grantor warrants that they have received title.
  2. The grantor warrants, unless noted specifically in the deed, that the property was not encumbered during their period of ownership.

The grantor of the special warranty deed, in effect, only warrants the title against their own actions or omissions. They warrant nothing prior to their taking title. If specifically stated in the deed, other warranties can be conveyed. Special warranty deeds are frequently used by executors and trustees as well as large property developers selling through a corporation.

A grant deed transfers interest in a property from the Grantor to the Grantee for a set price. The grant deed does guarantee that the Grantor owns the property and states it is free of all liens and encumbrances, it does not provide a guarantee against defects of title. This means if a title search in the future where to determine that the property was wrongfully transferred at some point in the past and there is a “chain of title” problem, the Grantor of a grant deed is not responsible for this title defect. This deed is most commonly used in California and basically states that the property has not been sold to anyone else and is not encumbered by any liens placed on it by the current Grantor.

A tax deed is given to an individual who either purchases it directly at a tax deed auction from the county or forecloses on a tax lien certificate which was not redeemed. A tax deed acts similar to a quit claim deed in that it grants title to the owner but does not warrant against any other liens on the property.

When consummating your real estate investment transactions, always ask for a warranty deed since it gives you the most protection possible for the property. However, if the seller is unable to do this then I strongly recommend you hire a title company to do a “lien search” on the property to know for sure just what problems you may be buying. Most title companies will run this search for you for a flat fee of anywhere from $35 to $85 dollars. It is well worth it as this small payment could save you hundreds of thousands of dollars on a bad deal.