About 64% of American households own their home, and millions more own properties they plan to develop, office buildings, inheritances in the form of real property, and land they may never use. The average person moves 11 times in his or her lifetime. All of this property, all of that moving, and the ever-shifting nature of life in an uncertain world add up to one fact that will probably never change: lots of people are transferring lots of properties.
Whether it’s a small plot of land you’ve been sitting on for years, or the family farm that has been your life’s work, correctly transferring your property isn’t just a bureaucratic necessity. It can help maintain family peace, protect your finances, and ensure loved ones get a fair inheritance.
A number of deeds can accomplish the task of transferring property to someone else, whether they’re family or a perfect stranger. But the right deed for you depends on the circumstances under which you’re transferring the title. And, of course, if you’re in doubt, consider seeking support from a real estate lawyer who can help you ensure that your property transfer is legally sufficient.
Remember that in deed speak, the person who owns the property and who is signing the deed is known as the grantor, while the recipient of the deed is referred to as the grantee.
quitclaim Deed
A quitclaim deed transfers the owner’s interest in a property, but includes no warranty to back it up. So if a grantor signs a quitclaim deed but has no interest in the property, the deed ends up transferring nothing. These deeds are common among people who know each other and have established some level of trust. For instance, a parent or grandparent might use such a deed to transfer real estate to a child, but quitclaim deeds are also used in divorce settlements. A quitclaim deed usually does not involve the actual purchase of the real estate, just the transfer, so if you’re planning to transfer real estate to someone you love, your lawyer will likely consider a quitclaim deed as your first option.
Consider using a quitclaim deed if:
- There is an issue with the title and another person may have an interest in the property.
- You are receiving property from someone you trust.
- You are divorcing your spouse, and neither of you is sure how much interest the other party has in the property; a quitclaim deed transfers the interest fully without having to waste time and money researching various claims to the property.
Beneficiary Deed
A beneficiary deed, sometimes called a transfer-on-death deed, is a deed that transfers real property only upon the death of the grantor. The deed does not create any interest in the property prior to the death of the grantor, which means that the grantee has no right to the property until the grantor’s death. You can revoke a beneficiary deed, or assign it to someone else as many times as you wish. People often choose beneficiary deeds because they allow grantors to easily transfer property without probating a will first.
Consider using a beneficiary deed if:
- You are leaving real estate to a loved one, but want that loved one to immediately have access to the property, such as when a husband transfers property to his wife, who already lives in the property.
- You have property that you do not want to be publicly probated in a will; note that beneficiary deeds are still matter of public record.
- You do not want the recipient of the property to have any interest in the property until after your death.
- You want broad latitude to amend the recipient of your property until you die.
General Warranty Deed
A warranty deed provides significant warranties about the property, and for this reason is the most common deed for buying and selling property—especially to strangers. A warranty deed guarantees that the seller is permitted to sell the property, and that the title is free of liens and other claims. The deed creates a requirement that the seller defend the property against other claims. Should any claims intrude upon the buyer’s property rights, the seller is typically required to compensate the buyer.
A warranty deed may be the best option if:
- You are buying property from a person you do not know.
- You are purchasing property from anyone, known or unknown, and are concerned about the history of the title or property.
Limited Warranty Deed
A limited warranty deed—often referred to as a special warranty deed—confers most of the rights, benefits, duties, and obligations of a general warranty deed. The grantor conveys the property and any interest in the property, and certifies that he or she is permitted to sell the property and that the property is free of undisclosed encumbrances. However, with a limited warranty deed, the grantor does not take on any obligation to defend the property against all people making a claim against the property. Instead, a limited warranty deed requires only that the grantor defend against claims made through the grantor, offering little protection from previous claims or prior owners.
A limited warranty deed is rarely the best choice, but it may be the only option. Consider a limited warranty deed if:
- You are purchasing a foreclosure or other bank-owned property at a significant discount.
- There is some other reason to take on the additional risk that attaches to a limited warranty deed, such as an incredible deal on a property or a property that you’ve sought for many years.
- You’re purchasing a commercial property; these deeds are much more common among commercial transactions than with residential property purchases.
Bargain and Sale Deed
A bargain and sale deed is similar to a quitclaim deed, but is used with real estate that has been purchased, rather than just transferred. Bargain and sale deeds offer no guarantee that the seller is the sole owner of the property, that the deed is free of encumbrances, or that the seller will in any way defend or protect the deed from encumbrances.
Because a bargain and sale deed offers no warranties, it’s a highly protective choice for the seller, but offers little in the way of protections for the buyer. If you’re purchasing a property, you may want to investigate the property’s title history prior to agreeing to a bargain and sale deed. These deeds are common among governments, and may also occasionally be used in foreclosure sales.
Because a bargain and sale deed offers little to grantees, grantees should not suggest this type of deed. If you’re a grantor, a bargain and sale deed could be the right choice if:
- You’re selling property that you inherited or purchased from a third party, and which you know little about.
- You’re eager to quickly sell a property that you have inherited or otherwise gained access to, and you’d rather seek a lower sale price than expend the time and energy it takes to ensure the property is unencumbered.
Grant Deed
A grant deed, like special and general warranty deeds, transfers interest in the property from the seller or buyer as long as the buyer pays the agreed-to price. While a grant deed asserts that the seller owns the property and can sell it free of debts or encumbrances, it does not protect against title defects—unlike a limited warranty deed. This sort of deed also does not create any obligation for the seller to defend the title against encumbrances.
Use a grant deed if:
- You are a seller and know you can freely sell the property.
- You’re not sure whether there are defects in the title, and are unwilling to spend your time and energy finding out.
- You’re a purchaser, and are comfortable taking on the risk a grant deed entails, and/or the purchase of the property is otherwise worth it to you.
Fiduciary Deed
A fiduciary deed transfers property when the grantor has some fiduciary duty to the property, such as when an executor transfers property to the heirs to a will. These deeds prevent a fiduciary from benefiting financially from the sale, and require that the fiduciary accurately disclose the condition of the property. These deeds warrant that the fiduciary is acting in his or her legal capacity, but may not warranty that the title is free of defects; this part depends on the specific terms outlined in the deed, so it’s especially important to have a lawyer look over your fiduciary deed.
A fiduciary deed may be the right choice for you if:
- You are attempting to sell a property on behalf of a person who is disabled, incapacitated, or otherwise unable to tend to his or her affairs.
- You are the executor or trustee of a property and need to sell it.
No deed is right for all circumstances, and even the deed that seems right for your situation might not be. The decision to purchase, sell, or transfer property is a big one, so it’s critically important to understand all of the options at your disposal. Protect yourself and your finances by consulting with a lawyer if you have questions about selecting the appropriate variety of deed.
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