Types of Deeds
A real estate deed is a legal instrument that, when properly signed and delivered, conveys title or a more restrictive interest to specified real estate. There are different types of deeds that vary according to what the grantor can convey, what the grantor wants to convey, and what warranties that the grantor can or wants to include in the deed.
The most common types of deeds include:
- general warranty deeds
- deeds with limited or no warranties
- special warranty deeds
- bargain and sale deeds
- quitclaim deeds,
- deeds held by trusts
- deed of trust
- reconveyance deed
- trustee's deed
- deeds executed by courts
- administrator deeds
- executor deeds
- master deeds
- sheriff's deeds
There are also some special deeds that serve a particular purpose. A correction deed corrects an error on a previous deed. A deed to release simply releases property when the loan for which the property served as security is paid.
General Warranty Deed
The general warranty deed provides the greatest conveyance and protection to the grantee because it includes warranties or covenants that the seller conveys with the title. State laws differ in how the general warranty deed is created, but, usually, there are specific words that make a deed a general warranty deed, most notably, convey and warrant and warrant generally. Most of these warranties cover the warranty of good title and encumbrances:
Warranty of Title
Covenant of seisin: the grantor warrants the title that is being conveyed to the grantee. If the title proves to be defective, the grantee can sue for damages. The following warranties can be construed as being corollaries of the covenant of seisin.
Covenant of quiet enjoyment: the grantor guarantees that the title is superior to any other claims by 3rd parties. If someone succeeds in establishing a superior claim, then the grantor will be liable to the grantee for the damage. In fact, the covenant of warranty forever is the guarantee that the title will always be good, and that the grantor will compensate the grantee if it is later found that the title is defective. If the title defect is something that the grantor may cure, then the covenant of further assurance requires that the grantor do whatever is necessary to clear the title. Thus, if the grantor's spouse had dower or curtesy rights to the real estate, but did not sign the deed, then the grantor may obtain a quitclaim deed to clear the title.
Warranty Against Encumbrances
The covenant against encumbrances is the only warranty that does not cover the title in some way, but guarantees that the only encumbrances to the land, such as mortgages, mechanics' liens, or easements, are those that are listed in the deed. If, later, it is discovered that there was an encumbrance when title was transferred that was not listed in the deed, then the grantor is liable for the amount to have the encumbrance removed.
Special Warranty Deed
A special warranty deed guarantees less than the general warranty deed: that the grantor received title, and that there were no encumbrances other than what is listed in the deed while the grantor held title. The special warranty deed is usually conveyed with the phrase Grantor remises, releases, alienates, and conveys. There is no guarantee against title defects or encumbrances that may have been present when the grantor received the property, nor does it obligate the grantor to do anything further once the title is transferred.
Special warranty deeds are frequently used by temporary holders of real estate, such as trusts, or other fiduciaries, or corporations, who do not use or occupy the land for their own benefit. Often, the special warranty deed is issued when the real estate is sold in a tax sale.
Bargain and Sale Deed
The bargain and sale deed has no guarantee that the land being sold is free of encumbrances—the only implication is that the grantor has title, and not one that is necessarily free of defects. The bargain and sale deed is most often the deed that is transferred from a foreclosure or tax sale—hence, the name. Since the grantor, usually a bank or tax authority, did not occupy the land, it would not necessarily know of any encumbrances that may have been attached to the land by the previous owner, and, thus, the grantor does not want to guarantee against any encumbrances. Generally, the bargain and sale deed are conveyed with the words that grantor grants and releases or grants, bargains, and sales.
The quitclaim deed carries no warranties at all—it only conveys the interest that the grantor had in the property, whatever that may be. The real estate interest may be full title, but the grantor does not guarantee it.
The quitclaim deed is used in those cases where the grantor does not want to assume further liability, or feels no need to guarantee title, such as when a family member transfers title to another family member or the grantor is only transferring some of his rights and not conveying a fee simple estate. A quitclaim deed is also used to cure a title defect, such as a misspelled name on the deed. The quitclaim deed is also used when the grantor's title is not clear. For example, if the grantor inherited the property, but wants to sell it for the cash, she doesn't want to guarantee something that cannot be known with certainty, and, thus, to limit her liability, she sells only her interest in the property—whatever it is. If the title later proves defective — even if the grantor did not even own the property, but only thought that she did — the grantee of the quitclaim deed has no legal recourse against the grantor.
Deed of Trust, Reconveyance Deed, and Trustee's Deed
Since property can be conveyed through a trust, there are 3 different types of deeds associated with trusts, depending on the grantor and grantee. The trustor (aka grantor) is the creator of the trust, the beneficiary is the party benefiting from the trust, and the trustee is the fiduciary administering the trust for the trustor.
- A deed of trust (aka deed in trust) is a deed that conveys title from a trustor to the trustee for the benefit of the beneficiary. In many states, a deed of trust is used in lieu of a mortgage, when the borrower, the trustor, transfers the deed to a trustee as security for the loan given by the lender to the beneficiary.
- A reconveyance deed is a deed conveying title from the trustee back to the trustor, such as when the trustor pays off the loan that was secured by the real estate.
- A trustee's deed is a deed conveying title to another party who is not the trustor. In most cases, this would be the beneficiary. The deed must state that the deed was executed according to the terms of the trust.
State statutes stipulate the different kinds of deeds that are executed pursuant to court order, including deeds by administrators and executors, sheriff's deeds, master deeds, and other types of deeds that are executed without the consent of the owner or, through a will, such as an executor deed. Most court-order deeds also list the actual price of the real estate as consideration.