Why use a Warranty Deed

What the Deed?

Deeds are one of, if not the most important legal documents that are used to transfer ownership from one party to another. When a buyer (grantee) purchases a piece of property from the seller (grantor), the written document that actually transfers that property is called a deed. Although a deed is used to transfer ownership, the type of deed that is used makes a difference. In most real estate contracts and for a “standard insurable closing” a type of a warranty deed is required.

Warranty Deed

There are different types of warranty deeds that essentially do the same thing. The most common type is a “general” warranty deed, which is used to transfer real property from people to people.

Many different words can appear in the title of the document. You may see “corporate”, “trustee”, “executor”, or “conservator” (just to name a few). This is to identify the capacity or authority the grantor (seller) has to transfer the real estate.

The “warranty” is a guarantee from the grantor (seller) that they own the real estate and will defend their ownership. They promise that they have the right to sell the property and that no other person has an interest in it.

Also of note, a “special” warranty deed could be used as well. The word “special” means just that, it’s special. Something in the wording of the document is special and not standard, I would advise you to review the document before accepting it…and as with any document, if you have questions please contact an attorney for a legal opinion before proceeding.

Quit Claim Deed

A “Quit Claim Deed” has no warranty of ownership to the grantee (buyer) of the real estate by the grantor (seller). It simply means that any ownership the grantor may (or may not) have is being transferred to the grantee. We have seen these used when a life event has happened to the current owner. For example, to add a spouse to title after a marriage, or to remove a former spouse from title after a divorce.

Unfortunately, we have seen this in communities with low property values when the owners are looking to do a quick transaction, usually for cash. Well, as AC/DC pointed out to us, dirty deeds are done dirt cheap! Sorry, when I started to think about writing a post on deeds, I knew I had to work that in…So always question a seller as to why they want to do a quit claim deed instead of a warranty deed, through a title company, with title insurance. If they are not willing to insure it, there is usually is a reason.

Extra credit for another day…Other types of deeds include, but are not limited to, a “Collector’s Deed”, “Sheriff’s Deed”, and a “Deed in Lieu of Foreclosure”.

Happy Closings

Brett