A deed is a legal document that makes official the legal transfer of part or all of a piece of real estate from one party to another. The grantor must sign the deed over to the grantee, conveying real property in the process. Generally, the deed must be notarized and recorded at the local county record’s office in the county where the property is located.
There are several types of deeds which convey real property title. Quitclaim deeds can be used, warranty deeds, grant deeds, tax deeds, and special warranty deeds.
Deeds of trusts are similar to mortgages and do not convey real estate title, and create confusion by use of the word deed, since they are not deeds that convey title. There are some legal distinctions between deeds of trust and mortgages, the most visible of which are differing foreclosure methods, but they essentially represent a lien on the property created by a loan secured by that property.
A quitclaim deed essentially transfers whatever rights the existing owner/grantor has in the property, but includes no guarantees that clear title exists. Quitclaims do not guarantee the title is clear of liens, such as tax liens, mortgage liens, mechanics liens and the like, or that there are not other owners on title as well as the grantor. The interest the grantor has is what the grantee gets. Quitclaim deeds are by far the easiest, quickest, and least expensive to use, and require little professional assistance, if any, described further in the section on how quitclaims work. Quitclaim deeds are often referred to as a quick claim deed or quit deed in error.
A warranty deed is essentially the same thing as a grant deed. Warranty deeds and grant deeds provide some warranties as to what level of title you will actually receive, and are generally issued with the help of an attorney or title company, depending on in what state the property resides. The warranty deed comes with six covenants, covenant of seisin, indicating the owner in fact has ownership, covenant of right to convey, that the owner has the right to convey the interest in the real estate, covenant against encumbrances, saying the title comes with no encumbrances such as loans or other liens, covenant of quiet enjoyment, that other parties have no legal claim to the real estate, covenant of warranty, that the owner will guarantee the grantee’s rights if a third party tries to file a legal claim against the real estate, and covenant of further assurances, indicating the owner will do whatever is reasonable to perfect the grantee’s title if there is an imperfection found after transfer. When you purchase a property using a realtor and escrow process, you generally get a warranty deed or grant deed, and title insurance as a further guarantee of clear title. The title search, title insurance, escrow process, etc all take time and money when using a grant or warranty deed. There are 2 types of warranty deed, a general warranty deed and a special warranty deed. General warranty deeds have greater protections or warranties than special warranty deeds.
Tax deeds are used by taxing authorities to convey real estate. The IRS, state, and local tax authorities can all place a tax lien on a property, and eventually, if the taxes remain unpaid, can convey title to the property using the tax lien. The most common application of tax liens is when a county liens a property for unpaid property taxes. Some states, like California, actually auction real estate with unpaid county property taxes after a certain number of years. Other states, like Arizona, actually sell the tax liens to private investors in tax lien auctions, rather than conveying the property. The new owner of the lien can then obtain the property if the taxes, now due to the investor, remain unpaid for a certain period of time.
There are some other types of deeds, which are less commonly used. One type is a trustee deed. Trustee deeds are used to convey title when the grantor is a trust. Another type is asheriffs deed. Sheriff’s deeds are used to convey title when property is taken to satisfy a judgment. A gift deed can be used when a property is given with no consideration in exchange for the real estate. A deed in lieu of foreclosure can be used to convey property to a lender to avoid foreclosure. An executor deed or administrator deed can be used in probate or inheritance situations.
While quitclaim deeds offer less warranties, they are very easy, quick, and inexpensive to use. They are also ideally suited for certain types of transfers, where the parties know each other or have close associations. Examples of great uses for quitclaim deeds include adding a spouse to title after getting married, or removing a spouse from title upon divorce, changing title vesting from sole ownership to community property or another form of title vesting, transferring a piece of real estate to a family member or investment partner, inheritance or probate transfers, and transfers from individual ownership into a trust. Warranty deeds and grant deeds are better suited for purchases from unassociated parties, where more guarantees are needed to assure you are purchasing the bundle of rights and value you think you are purchasing. The section on common uses for quitclaim deeds provides more information on applications for quitclaims.