The 3 most common deeds that we see in real estate are Quitclaim Deeds, Limited Warranty Deeds and General Warranty Deeds.
A quitclaim deed transfers the ownership interest of the grantor to the grantee without any warranties or guarantees that title is good or that the property is free of liens or claims. It transfers whatever is owned by the grantor. If the Grantor owns nothing, then nothing is conveyed. If the Grantor co-owns along with others, the Grantee gets what the Grantor owned – ownership along with others. The quitclaim deed is used mostly in non-sale transactions such as transfers between spouses or parents to children. It is used also in commercial transactions to clear title issues.
Limited Warranty Deed
When a special or limited warranty deed is used, the grantor only warrants that there are no title defects during the time the grantor owned the property. The limited warranty deed gives the grantee more protection against claims to title than a quitclaim deed, but less protection than a general warranty deed. If a tax lien or another lien pops up that was prior to the ownership of the grantor, the grantee may have to pay it. Note the title insurance comment below.
General Warranty Deed
A general warranty deed offers the best protection for the grantee because it guarantees, from the beginning of time, that the title is good and marketable. The grantor promises the grantee that the grantor will defend the grantee from any all claims made by third parties. That tax lien owed from before the time the grantor owned the property would have to be covered by the grantor.
GAR Purchase and Sale
The GAR Purchase and Sale Agreement includes conveyance by Limited Warranty Deed. That is, there are no title defects during the time that the Grantor owned the property.
To bridge the time gap between the Limited Warranty Deed and the General Warranty Deed (that is, the beginning of time), it is always best to advise buyers to buy the broadest title insurance, just in case.
Deed to Secure Debt
A deed to secure debt, also referred to as a security deed, is a completely different type of deed. It is an absolute conveyance of the property by the buyer to the lender. The lender has an obligation to reconvey the property to the buyer upon payment of the debt by the buyer. While the debt is being paid, the buyer has equitable title and the lender has legal title.
There are additional types of deeds that are not as common as the above types, such as Gift Deeds, Deeds in Lieu of Foreclosure, Deeds under Power of Foreclosure, Tax Deeds and Survivorship Deeds.
As always, if you have any questions about specific deeds, contact a member of the Broker Team!
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