In this article...
A deed is a legal document that allows a grantor (owner/seller) to convey real property to a grantee (buyer). A deed will describe the property that has been conveyed and may contain additional information about title or permitted or restricted use of the property.
In this article, we explain some basic things you should know about your deed, including:
- What are the 3 most common types of deed?
- What are the requirements of a deed?
- How do I record the deed?
Keep in mind that the law of each state may differ slightly regarding the use and interpretation of deeds, but this should help give a general idea of important concepts.
What are the 3 most common types of deed?
General Warranty Deed (Warranty Deed)
This is the most common type of deed for real estate transactions, especially residential transactions, or transactions with a lender financing the purchase through a mortgage. This is also the deed that is “best” for the buyer (grantee) in the sense that it warrants that the seller (grantor) actually owns the property they intend to convey, and can convey the property with good title, free of any encumbrances.
So, if a problem arises with the grantee’s title, such that their ownership of the property is contested, it would be the grantor’s responsibility to defend the grantee’s title of the property. This is where the need for title insurance usually comes in. For more information about title insurance and why it is necessary, please see _(linked article) What is Title Insurance and Why do I need it?
Specific Warranty Deed
The Specific Warranty Deed is very similar to a General Warranty Deed. The difference is, where a General Warranty Deed warrants that title is good during the grantor’s period of ownership and before, a Specific Warranty Deed only warrants that title is good and grantor did not encumber it during grantor’s period of ownership. So for example, if someone came out of the woodwork and said “I have a claim to the property, and it predates the grantor’s ownership” the grantor would not be responsible for defending grantee’s title, so long as the issue predates the grantor’s ownership. Special Warranty Deeds are more common in commercial real estate transactions.
If a grantor uses a Quit-claim Deed, there is no warrant that the grantor’s title is good or free of encumbrance. The grantor is merely giving up whatever interest they own in the property to the grantee. If it happens that the grantor does not actually own the property, it’s bad luck for the grantee. For this reason, quit-claim deeds are generally not used when buying or selling property with 3rd parties.
Quit-claim deeds are more commonly used between family members, or when transferring property to a legal entity owned by or associated with the grantor. If you are giving property to yourself, or your children, the warranties of the above deeds are likely not as important to you, because you only intend to transfer only whatever it is you own.
Requirements of a deed?
Again, requirements of deeds differ to some degree between states, but these requirements are common, and usually required in all deeds.
- Grantor (with signature) and grantee.
- Both the grantor and the grantee must be named, and the deed must be signed by the grantor.
- Recital of consideration.
- Consideration is the value that the grantor gets in exchange for the deeded property, usually the purchase price. However, most states require only a “recital” of consideration. So, words like “X property in exchange for good consideration” must be included in the deed.
- Words of conveyance.
- Conveyance is the transferring of property from one person to another. The deed must include words like “conveys and warrants” to indicate that the grantor intends to transfer and guarantee rights and title to the grantee.
- Description of land.
- It needs to be clear exactly what land is being conveyed, and this will normally mean a legal description of the land and a parcel number for tax purposes. Maps of the property in a county are broken into pieces. Plat maps or surveys can show smaller portions of land broken into lots. The Legal description describes the land being conveyed based on the map, and tend to be long and look something like “The NE ¼ of the NW ½ of the SW ½ of section 15 according to…”
- Acknowledgement means that the grantor’s signature is witnessed and acknowledged, generally by a notary public. While some states do not strictly require acknowledgement, having the document notarized is proof that the signature is authentic if an issue were to come up in the future, and title insurers generally require it.
- The signed deed must be given to the grantee, and the grantee must accept it. Because the grantee does not sign the deed, acceptance is generally shown by the grantees conduct and participation and does not require specific proof of acceptance.
- Limitations, Covenants, Easements, Habendum Clause.
- Often, the grantee will receive the property in its entirety and with the freedom to use or dispose of it however they see fit – fee simple ownership. However, sometimes there are limitations to a grantee’s ownership that are written into a deed. Servitudes are rights or obligations that “run with the land” and can take the form of covenants and easements. They may or may not be written into the deed, but you should watch out for them, and find out if there are limitations that are not included in the deed but may still affect the property.
- Covenants can restrict how you are allowed to use the land. Easements are obligations to allow 3rd parties to use your land for a specified purpose, often to come and go by a specified path or road on the property. While uncommon in residential transactions, a habendum clause can specify how ownership is limited in some way.
How do I record the deed?
For most people, after a real estate closing has happened, an agent of the bank or title company will send the deed to be recorded, and have it sent to the grantee afterward.
Generally, for a deed to be recorded it must have all required elements determined by the State that the property is in and be sent to the register of deeds in the county where the property is located, along with whatever recording fee that register of deeds requires.