Transactions are two-fold: once you pay for an item or service, you can take ownership of it. But buying property is a bit in that you have to navigate through and sign a great deal of paperwork before you can claim ownership of any piece of real estate or property. In this regard, one of the most important documents you’ll come across when buying property is the property deed.
This article will define and explain what property deeds are, what they include, and the different types of deeds you may encounter when the property is bought and/or sold.
A property deed is a legal document used to transfer property ownership from the old owner (the grantor) to the new owner (the grantee). Signing the deed makes the property transfer legal and official.
Once the grantor and grantee sign the property deed, it becomes part of the public record and anyone interested in the property information can find it. Property deeds become key documents when property ownership disputes arise because the document confirms the owners based on the names listed on the deed.
Property records, property deeds, are maintained by local governments where the property is located. You can obtain a copy of a deed from your municipality’s clerk or recorder of deeds; you’ll need to at least provide the property’s address or the lot number to have the deed pulled from the database. When you need to draft a property deed, a real estate attorney or title company can help you.
Note: The terms “deed” and “title” are used interchangeably in real estate transactions, but the two mean different things. A deed is an official document that reflects ownership while a title means the legal right to the property.
A deed’s content varies depending on the type of deed, but mostly all deeds will include the following information:
Each real estate transaction is unique and, as a result, each property deed’s contents will differ to some extent.
However, there are universal elements that all deed types share, such as:
The most common deed types are warranty deeds, quitclaim deeds, and sale deeds. Let’s look at each one in turn.
A warranty deed is the most common and most secure type of real estate deed. With this type of deed, the guarantor provides assurance that the title of the property is clear and free of liens or encumbrances. Warranty deeds can be general or special.
A general warranty deed promises the buyer that the property is free of debts or encumbrances, and the seller has the legal right to transfer ownership. A general warranty deed is used when buying a property through a mortgage.
On the other hand, a special warranty deed does not make the same promise. Instead, it promises that the owner has the legal right to transfer the property and that there was no debt when the property was sold. The owner doesn’t provide any guarantee that any debts or encumbrances against the property did not exist before the seller took ownership. This type of deed is generally used when transferring ownership rights to the trust.
A quitclaim deed is a less secure type of deed, but it is the simplest way to transfer property rights to another person. Unlike a warranty deed, this type of deed does not provide any title guarantees. Therefore, quitclaim deeds are mostly used when transferring property within a family, especially during a divorce.
Pro Tip: Until and unless you know and fully trust the owner or know the title status of the property, it is not wise to purchase a property through quitclaim deeds.
A sale deed also does not provide a guarantee about property liens or debts; it only confirms that the seller holds the property’s title. Sales deeds are most commonly used in tax sales and foreclosures when the history of the property is unknown.
The deeds to a property typically include information about the property’s legal description, ownership history, and transfer of ownership. This can include details such as the property’s boundaries and measurements, any liens or encumbrances on the property, the names of previous and current owners, and the terms of any previous sales or transfers.
The title deeds to a property are typically held by HM Land Registry.
Deeds are considered proof of ownership, as they legally transfer the ownership of a property from one person to another.
When a mortgage is paid off, the house deeds are typically returned to the homeowner, or in some cases, the lender may send the deeds to the homeowner’s attorney.
If someone’s name is on the deed to a property, they typically have an ownership interest in the property. However, whether or not they can sell the property without the consent of other owners will depend on the ownership structure.
In most cases, yes, title deeds are required to sell a property. The deeds are an important legal document that proves ownership of the property and are typically needed to transfer ownership from the seller to the buyer.
If you lose your title deeds, it can be a complicated and time-consuming process to obtain replacements. In most cases, you will need to apply for a copy of the deeds from the Land Registry or another relevant government agency.
Based on how important deed documents are, it is important to maintain their accuracy. A mistake in the spelling of a name or any omission of property information might create problems when it’s time to sell the property later. As soon as you buy a property, draft and record a deed to avoid any potential issues. It’s always in your best interest to consult with an attorney before becoming a party to any type of deed.