A deed is a legal document that passes title of ownership of real estate property from one party (the seller) to another (the buyer). In most cases, deeds must be registered with the County Recorder of the city in which the property exists. Deeds are signed by the seller and buyer in the presence of a notary. There are several different types of property deeds. Following is a list with a brief explanation of each type.
General Warranty Deeds: This is the most common type of deed. In a General Warranty deed the seller guarantees that no other party holds interest in the property, notwithstanding exceptions noted in the deed. If the buyer should later discover encumbrances undisclosed in the deed, he or she can sue the seller. Title insurance companies commonly require a General Warranty deed before granting insurance to the buyer.
Limited Warranty Deeds: A Limited Warranty deed is similar to a General Warranty deed except that it only covers the time period during which the current owner has owned the property. It does not warrant the prior period, as does the General Warranty deed.
Quit Claim Deeds: A Quit Claim deed is used when a person wants to pass his or her interest in property on to another. The party "quits claiming" the property. Quit Claim deeds do not include a guarantee to the buyer that the seller has actual ownership or interest in the property. If it happens that the property is otherwise encumbered, the buyer is out of luck.
Life Estate Deeds: This type of deed is used when the owner wants to bequeath his or her property directly to another person upon death. The person named in the Life Estate deed is referred to as a remainderman. Property is not subject to probate in this case, but if the owner should decide to sell the property instead, the remainderman must grant permission, sign the new deed, and share in any profits.
Transfer on Death Deeds: Due to potential complications of the Life Estate deed, this newer type of deed allows the living owner to retain all rights to the property until death. Only then does the beneficiary take possession of the property. This type of deed also avoids probate, but allows the living owner to change his or her mind, sell property, or name a different beneficiary, all without requiring consent or even knowledge on the part of the beneficiary.
Survivorship Deeds: A Survivorship deed is commonly used by couples who want to make sure their property goes directly to the surviving partner upon death of one partner. When the second partner dies, however, the property is subject to probate. With a Survivorship deed, the last surviving party named in the deed gets complete ownership of the property. It is not recommended, therefore, for situations in which an estate should be equally divided among children or other parties.
While this article provides general information, it is not advice. Consult a licensed professional familiar with the laws of your state for guidance on the type of deed that will best serve your purposes and protect your investment.
