Tag Archives: Deed

5 Common Types of Deeds

deedA property deed is a legal document that is used to transfer the ownership of a property from one person to another. Most deeds have at least four things in common. A legal deed should indicate who the grantor is, which is the individual giving away the property rights, and it should identify who the grantee is, which is the individual receiving the rights. There also should be a description of the property and the deed should have a witness’ or notary’s signature validating that the grantor and grantee who signed the deed are who they say they are. However, there are different types of deeds. The five most common types of deeds are warranty deeds, quit claims deeds, sheriffs deeds, bargain and sales deeds, and grant deeds.

A warranty deed is the most protective type of deed that a buyer can receive. This document ensures that the seller or grantor is the rightful owner of the property and it guarantees that there are no liens or encumbrances associated with the property. Warranty deeds, in many states, come with covenants and there are four common types of covenants. The first covenant, the right of seisin, means that the seller promises that he or she has real title to the property. The second covenant is the right to convey, which means that the grantor not only owns the property but also has the right to transfer the ownership. The third covenant is against encumbrances to make sure there are no liens or mortgages on the property. The fifth is the covenant of further assurances. So, if an issue arises with one of the covenants, for instance if liens are discovered after the transfer of ownership, then the seller will have to assist the buyer and deal with the liens.

The second most common deed is a quit claim deed. With this type of deed, the seller does not guarantee that their title is valid. A quit claim deed is a type of transfer that doesn’t warranty any type of insurances from the grantor. It basically transfers the grantee any rights that the grantor has to the property and if the grantor doesn’t have any rights then the grantee does not receive any rights. A quit claim deed carries the least amount of insurances for the buyer which is a disadvantage because the buyer isn’t guaranteed to receive the property rights. That being said, this type of deed is usually used to change names on a deed or to correct a misspelling and there is usually no monetary exchange.

A sheriffs deed is often used by the government during a foreclosure. Typically this type of deed is used in a judicial state where the foreclosure has to go through the court system. Once the foreclosure process is complete, the sheriffs deed is given to the successful bidder. Although, sometimes a sheriffs deed comes with a right of redemption which means the person who was foreclosed upon has the right to pay to get the property back for a certain amount of time with added penalties.

A bargain & sale deed applies ownership like a warranty deed but does not guarantee the ownership. It is also similar to a quit claim deed but the property is sold rather than relinquished. It basically states that the grantor believes in good faith that they own the property and sell it to the grantee, but they don’t guarantee anything.

A grant deed is similar to a warranty deed but without the covenants. It is used by an individual with the understanding that they own a property, have the right to transfer their ownership to another person, and they don’t believe there are any liens or encumbrances on the property. Yet, they aren’t guaranteeing that; if an existing lien that was not known before were to come up after the ownership transfer than the grantor would not be liable for it.

What Is A Title Search And Why Do You Need One?

A Title Search is conducted for many reasons.  The most common is before the transfer of ownership interest from one party to another or simply put, “before it is sold”.  If the buyer is securing financing for the purchase, the lending institution usually requires proof of ownership of the seller and their right to transfer interest as well as to ensure that there are no outstanding liens or encumbrances on the property that may be associated with the subject property.  In some instances a lender may want to use this information for title insurance, thus adding a high level of security to the lenders investment.

Experienced investors routinely obtain title search reports.  One of the biggest mistakes commonly made by a novice investor, is the failure to obtain a Certified Title Report prior to a sale or auction   Sean O’Toole, founder and chief executive of ForeclsoureRadar.com says on MSN.COM  that a title search is your best chance of success and that “the title search is must.”

Litigation and property rights are other important reasons to obtain a title report.  For example:  What do you do if your home is being wrongfully foreclosed?  How do you resolve an ownership dispute?  Does someone else have the mineral rights to your land?  Do you suspect you inherited land from a deceased family member, but you can’t prove it?  What if you are being audited by the IRS or other government agency? Did you re-invest your capital gains into a piece of real estate in accordance with the law? How do you prove that you did?

The bottom line is, if you are buying, selling, financing, litigating or investing in a piece of real estate, it is part of your due diligence to obtain an official title report.

What is a title search?

1.      A title search is a process of determining who, from the official public land records, has the legal right of ownership to the subject property.  The answer can be as simple as a single person owning a house or as complicated as multinational corporations owning fractions of interest that may contain mineral rights, easements, contractual covenants, obligations and rights of survivor ship.

2.      There are two typical types of searches.  A Current Owner Search and a Chain of Title.  A chain of title search is just what it sounds like. It is the historical record of ownership from one party to another up until the present time.  A chain of title is usually for a specific period of time and is often used for mineral rights, litigation, title insurance and historical research.  A current ownership search looks at the subject property starting from when the current owner first took possession of the property.  This could be 2 weeks ago, or 2 centuries.  It is like a snapshot in time of the financial and legal standing of that property as it currently exists.

3.      A title search can show you if there are any open liens, mortgages, and deeds of trust or even other owners.  This information can be critical to determine who is needed in order to legally transfer the ownership to another party

4.      In addition to all of this, the title search provides the present status of real estate taxes and other municipal charges that may be due and payable from previous years.

5.      A quality title search will also contain a judgment search.  This is performed to determine whether there are any unsatisfied judgments, federal or state income tax liens, mechanic’s liens, bankruptcy or other judgments against the seller or prior owners that attached to the property.

6.      Some title search services may provide a list of “Comps”.  This type of information generally shows the buying and selling history of similar properties in the local neighborhood.  This information is important for home buyers, investors and developers.