What is a deed?
Updated March 10, 2022
A deed is a legal document that transfers the ownership of a property from the seller to the buyer. Unlike a title which refers to the concept of the legal right to ownership, a deed is a tangible document that describes the property and its boundaries, and names the grantor (seller) and grantee (buyer).
A deed is a legal document that transfer ownership of a property. Credit: Scott Graham/Unsplash
Deeds must also describe the grantee’s rights and include “words of conveyance” or a “granting clause” to make the transfer of ownership official.
They should also contain a “consideration clause,” which specifies what the grantee gave the grantor for the property—typically the sales price, unless the home was given as a gift. Deeds are often one or two pages long. Both parties must sign the document to make the transfer of ownership official.
Types of Deeds
- General warranty deed: In this type of deed, the seller promises the buyer complete legal ownership and that the property is free of any liens or encumbrances not described in the deed. If the new owner later finds defects not outlined in the deed, they can sue the seller; the seller will also be considered liable for addressing any problems or debts on the property. These deeds are usually prepared by a mortgage company.
- Special warranty deed: Buyers are given less protection with this type of deed, which promises that the seller has done nothing to create defects to the property while they owned it. In other words, the buyer is not protected against any defects or debts that arose outside the period of time that the seller was in possession of the home. Sellers generally prefer the special warranty deed because it offers them more protection, while buyers typically ask for a general warranty deed. Sometimes this requires negotiation between the two parties, and may compel the buyer to take out title insurance, which protects them if any issues against the title arise from either the seller’s period of ownership or the time prior to that.
- Quitclaim deed: These deeds offer no warranty to protect the buyer if there are encumbrances on the property; they simply transfer ownership from grantor to grantee. These deeds may be used when parents are transferring property to children, one spouse transferring property to another, or individuals transferring properties to LLCs or trusts, without money changing hands.
- Special purpose deeds: These deeds are typically used in court proceedings under specific circumstances. A tax deed, for instance, transfers property ownership to the government when taxes have not been paid on a home; the property is then sold at auction. An executor’s deed may be used to transfer the ownership of a home from a deceased person to the recipient named in their will. Administrator’s deeds, by contrast, are used when a person dies without a will, and involves a court-appointed executor conveying ownership to a grantee.
What should buyers and sellers consider?
Buyers and sellers must both determine which type of deed is the right fit for them; buyers should also consider whether they want to purchase title insurance and conduct a title search in order to further protect themselves from outstanding liens and other issues with the property. Sellers should ensure they have outlined any potential property issues on the deed.