If you own a house, the fundamental piece of evidence that proves your ownership to the rest of the world is the deed to that house, also called a ‘title.’ Deeds come in the form of legal documents, but not all deeds are created equal. There are different types of deeds, each with its own unique set of implications.
Today we’re going to explore the 3 basic classifications of deeds, but before we get into the nitty gritty of their differences, let’s first look at the motivations at play when a house or a piece of property is purchased. These motivations will play into the mechanics of each type of deed.
What Do Sellers Want?
If you are a seller, you want to receive fair compensation for your property, and then move on with your life. Simple. And you don’t want the sale of your property to be contingent on any sort of promise or condition that could detract from that simplicity.
What Do Buyers Want?
If you are buying property, you want to pay a fair price, and you don’t want any surprises after the purchase has been completed. You want every possible assurance that your hard-earned money has been well spent, and that everything is going to be okay.
The Big 3 Types Of Deeds
A quitclaim deed transfers the ownership from the seller to the buyer in the most final and absolute of terms. As the name suggests, with a quitclaim deed, the seller is acquitted of their interests in and responsibilities to the property in question, completely.
If you are the seller, this should be your legal instrument of choice. It helps you unload your property quickly and efficiently so that you can take the money and run, so to speak. Buyers should be wary of this type of deed.
General Warranty Deed
For most people, the word “warranty” is only uttered in relation to return policies for consumer goods that they have purchased. This should give you a surface level idea of what a general warranty deed stipulates.
General warranty deeds protect the interests of buyers. A seller that conveys a general warranty deed will, in doing so, make a certain set of promises to their buyer. Then, if the property in question falls short of any of these promises, the buyer will be held accountable. One such promise that is a staple of general warranty deeds is that the seller is responsible for problems and/or faults that might arise with the property after the sale. In this case, this guarantee will cover the entire history of the property, regardless of how long the seller has owned it.
So general warranty deeds are good for buyers, but not so good for sellers.
Special Warranty Deed
If a compromise exists in the world of deeds, this would be it. A special warranty deed is the closest thing to a middle ground as exists between a quitclaim deed and a general warranty deed. This legal instrument can and should be fine tuned to take into account the interests of both the buyer and the seller. However, special warranty deeds are anything but simple.
In general, deeds are complicated legal instruments. Special warranty deeds can be particularly tricky because they are more customizable than any other type of deed. The key difference between a special warranty deed and a general warranty deed is that the guarantees made in the special warranty deeds only cover the time when the seller owned the property. Any issues that predate the seller’s ownership of the property in question will become the buyer’s problem.
Making Sure You Get It Right
The exact terms of a deed that will be conveyed with the purchase of a property can be a sticky subject and are nearly always far too complex for the average home buyer to negotiate alone. Of the 3 types of deed we’re covering today, special warranty deeds are particularly complex, which is why hiring a real estate attorney is of the utmost importance.
If you are buying or selling property in the near future, need help with your title and need a trustworthy, experienced legal counsel, that is where we excel. Get in touch with us today to take the first step towards protecting your interests!