So you have decided to purchase or sell some property. One of the issues that can come up during the sale of property is the type of deed that should be used. A deed is a document that formally transfers ownership of property from one person to another. Deeds come in various types. Each type has its own benefits and risks.
If you are thinking of purchasing or selling a property, you need to be aware of these types of deeds.
This is the first, and weakest, type of deed. This type of deed is rarely a good idea. A quitclaim deed conveys whatever interest the seller has in the property to the buyer. This means that a seller may not even have proper title to the property, and could be selling the buyer bad title.
A quitclaim deed can also limit the type of ownership the new buyer has to the same type of ownership the seller has. For example, if the seller has a life estate, the buyer would only get a life estate.
Therefore, it is important to know that a quitclaim deed can be dangerous.
Special Warranty Deed
The second type of deed is the special warranty deed. This type of deed is one step above a quitclaim deed. It gives a specific type of title to the buyer and comes with several warranties. A special warranty deed can protect a buyer from issues of title created by the seller.
For example, if the seller negligently causes a mechanic’s lien to be issued against the property prior to or during closing, a special warranty deed would protect the buyer.
However, a special warranty deed does not protect a buyer against issues that come up as a result of the negligence of prior owners.
General Warranty Deed
This is the strongest type of deed. This type of deed comes with several warranties and protects the buyer from any conditions caused either by the seller or prior owners of the property. This is the ideal type of deed to have when buying property, and it is the most valuable type of deed.
If you obtain a general warranty deed, you can bring a lawsuit against a seller for any issues of title, whether it was the seller’s fault or prior owners.
Why you need a real estate lawyer.
A lawyer can help you determine what type of deed is best for your particular case. Sometimes, you don’t need to have a general warranty deed, and can save on the costs associated with that type of deed. However, you need to be aware of all the risks associated with having a lesser type of deed. Therefore, before closing on any real estate transaction, seek legal counsel. That way, if there is an issue down the line, you will know your rights.