Property Deeds

Financing

Property Deeds

Property deeds are written documents used to transfer real estate from a seller (grantor) to a buyer (grantee). They include the actual transfer of the property, called the granting clause, a description of the property being transferred, called a habendum clause and, usually, a warranty. Deeds also must be signed by the grantor. It is the warranty, or lack thereof, that defines each type. Different types of deeds provide different assurances to the grantor and grantee, and are used in different situations.

l General warranty deed guarantees: the grantor is the owner of the property and has the right to sell it to the grantee; there are no debts on the property or defects in structures other than those recorded in the deed; should any unforeseen problems arise with the title, the grantor will reimburse the grantee for any losses.

l Special warranty deed: nearly identical to the general warranty deed but also includes the warranty that the grantor has the legal right to sell the property. However, it only guarantees that there are no debts on the property or defects in structures other than those stated in the deed during the period of the grantor’s ownership. This kind of deed makes no guarantees outside of what the grantor had knowledge of or caused.

l Grant deed: This kind of deed implies that the grantor has the right to sell the property, and that the property itself is unencumbered. However, it does not make explicit warranties like the above deeds. This is the most common deed used to transfer property in the United States.

l Quitclaim deed: has no warranty at all. Its purpose is for one party to release any interest that they had in a property. The deed doesn’t warrant that the grantor had any legal right to the property at all. Quitclaim deeds are usually used in divorce cases, in which one party releases any claim to the property.

l Deed-in-lieu of foreclosure: a homeowner who misses several payments and defaults on a loan transfers the deed to the lender in order to avoid foreclosure. This can use any of the above deed types in the transfer. There is no transfer of money because the homeowner owes the lender; the lender sells off the house to recover at least part of what the homeowner owes. The lender also provides the borrower with a form that states the debt is cancelled and another that states that the lender cannot ask for what remains of the debt after the property sale.

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