Understanding the Six Types of Deeds in Real Estate Transactions

When you need to transfer your interest in a piece of property to a person or entity, you need to sign a deed. What kind of deed you get to sign, depends on the specific kind of transfer that you wish to perform. This article looks at the six basic kinds of real estate deeds that you’re likely to encounter when you deal in property transfers.

Real estate transactions involve the preparation of legal instruments called deeds. There is more than one kind, however, and many people transacting in real estate, even those with experience, often have trouble understanding what each kind does. What follows is a quick explanation to help you understand the six kinds of real estate deeds that you’re likely to encounter.

The quit claim deed

Some people erroneously refer to this as a quick-claimdeed, but quit claim deed is the right term. With a quit claim deed, a person or business signing it gives up and transfers all their rights to the property in question to the other party named in the document. What this type of document doesn’t do, however, is to state that the signer actually holds title to the property in the first place. All it sets down is that the signer conveys their interest in the property mentioned, to another party, whether such interest exists or not. A quit claim deed is useful in legal disputes in which multiple family members stake their claims to a parcel of property, or when the title to a property is disputed.

The general warranty deed

Like a quick claim deed, a person signing a general warranty deed conveys ownership of a piece of property to another party. However, unlike with a quit claim deed, they also assert that they own the property, that they have the right to transfer the property, that there are no unmentioned encumbrances on the property, and that they are willing to defend the title against any other claimant who may claim to have obtained the property from the seller. The ability to make these assertions makes general warranty deeds the most powerful of any kind of deed, and the most desirable kind if you need to gain ownership of a piece of property.

The special warranty deed

The special warranty deed conveys ownership in real estate, as well, but makes fewer assertions than the general warranty deed. To be specific, a seller signing a special warranty deed asserts that there are no encumbrances to the property other than those noted, and the seller agrees to defend the buyer’s right to the property against any other claimant who may claim to have obtained the property from the seller.

The beneficiary deed

A beneficiary deed is used when a piece of property needs to be transferred upon the death of the title holder. The owner puts down the name of the party intended to receive the property and signs the deed while he still lives, and records it with the recorder of deeds. The actual transfer occurs once the owner passes away. This type of deed is a powerful way to go about your estate planning.

The deed of trust

A deed of trust is used when a lender needs to use a borrower’s real estate holding as security. There is no immediate transfer of real estate performed with such a deed. Instead, the deed merely gives the lender the right to take over the property and sell it, should the borrower default on their loan payments. In some ways, a deed of trust is not very different from a mortgage.

The deed of release

A deed of release is an instrument that a lender or lien holder signs to release their interest in a piece of real estate. When a lender has a deed of trust in a property that they hold on to as security for a loan, they sign a deed of release at the end of the deal, when the loan is fully paid off. A deed of release cancels out a deed of trust.

You need a real estate lawyer to help you draft a deed and make it legally valid. However, going in with some knowledge of how the different kinds of deeds work can help you feel more in control through the process.

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