A deed is a legal document that transfers property ownership from one party to another.
There are several types of deeds, each serving a specific legal purpose depending on the known and unknown history of the property, the existence of a lien, or other encumbrance like a mortgage.
What are the most common types of deeds?
This list of deeds explains the specifics of each deed type and when to use them:
1. Quitclaim Deed
A quitclaim deed transfers property between familiar parties, such as family members or divorced spouses. That’s because, unlike other deeds, a quitclaim deed offers little legal protection to the grantee (the transfer recipient).
For example, the grantee can’t take legal action if the grantor does not legally own the property outlined in the deed.
In addition, there are no legal protections against liens or other encumbrances that might exist on the property. Quitclaim deeds involve a high degree of trust and are preferred by people who know each other well.
This type of deed is also appropriate if the grantor is unsure of the title’s status and whether or not it has defects.
2. Deed of Trust
A deed of trust transfers the title of an asset from a trustor to the trustee for the benefit of a third party, known as the beneficiary.
A deed of trust is often used in a mortgage scenario instead of a mortgage, acting as security against a loan a trustor has transferred to a trustee.
Essentially, the trustee holds the property until the borrower has paid off the debt, agreeing to sell it if the borrower defaults on their loan.
The trustee retains possession of the legal title to the property (which entails legal and financial responsibility). At the same time, the borrower keeps the equitable title, meaning they can legally enjoy or use the property.
3. Warranty Deed
A warranty deed offers various legal protections to the grantor if the title has a problem or defect once it’s been transferred.
Warranty deeds come with different levels of protection and are split into two distinct categories:
General Warranty Deed
Typically used in residential real estate transactions, a general warranty deed guarantees that the seller has the full legal right to sell the property and that the property is free and clear of debts, liens, or other encumbrances.
This type of deed comes with the most significant protection for the grantee and provides them legal recourse if an unsettled debt or issue with the deed arises.
Special Warranty Deed
A special warranty deed protects a grantee against any issues or claims that might have arisen when the grantor owned the property entirely.
It doesn’t apply to the entire property history, as the current owner doesn’t likely know the property’s history.
This type of deed is often used to sell residential real estate or commercial property. While not providing as much legal protection as a general warranty deed, it does:
- Assure that the grantor is the legal owner of the property title
- Guarantee the property was not somehow encumbered when the grantor had ownership.
4. Grant Deed
A grant deed is a specific deed that transfers the interest in a property from the seller to the buyer in exchange for a previously agreed-upon price.
While the grant deed guarantees that the seller owns the property entirely, it doesn’t offer the buyer legal protection against any title defects such as:
- error in public records
- improper signature
- undisclosed lien
- boundary dispute
5. Bargain and Sale Deed
This type of real estate deed is appropriate in the sale or transfer of residential real estate; however, it offers no guarantee that the property is free of debts or liens. It only states that the grantor is the title holder.
As with a quitclaim deed, the grantee acquires any lien against the property and the title.
6. Mortgage Deed
A mortgage deed is a document signed between a homeowner and a bank or lending institution, allowing the institution to put a lien on the property if the loan isn’t repaid.
This deed secures property as collateral for a loan — meaning a “mortgage payment” is paid towards a loan debt, with the house serving as security in the event of a default.
When a mortgage deed is in effect, the financial institution holds the legal title to the property for the duration of the loan repayment period.
The various types of real estate deeds all serve different functions and offer differing levels of protection when transferring property or a piece of land.
Knowing the difference between deeds can help you understand which level of security is necessary for your real estate transaction.
Now that you understand the various types of deeds, understand the difference between a title and a deed before you consider transferring your property.