What is a Deed?

If you have ever bought or sold a house, you may be familiar with a document called a "deed." A deed is a legal document which conveys title (ownership) to real property. A deed is recorded at the County Recorder’s office in the county in which the real property is located, conveys title to the real property and identifies the owner of a particular parcel of real property. Once the deed is recorded, even if the original deed is lost or destroyed, title to the property is owned by the person or entity named on the deed. To transfer ownership of the real property to another, the current owner must execute a new deed and record it with the County Recorder’s office. There are many different types of deeds, all of which convey different legal rights.

General Warranty Deeds

The most common deed is called a "General Warranty" deed. Such a deed contains "warranties" or guarantees from the grantor (commonly the "Seller") to the grantee (commonly the "Buyer") that the Seller is the owner of the property and that no one else has any interest in the property, other than those exceptions stated in the deed. If it later turns out that someone else owns an interest in the property (such as an easement) that was not disclosed in the deed, the Buyer can sue the Seller because of the encumbrance. If you are purchasing title insurance with the sale (which will almost always be the case when a mortgage is needed to purchase the property), the title insurance company will require that you receive a general warranty deed.

Limited Warranty Deeds

A "Limited Warranty" deed is a less common form of deed that warrants the state of title while the seller owned the property. (A "Limited Warranty" deed’s warranty is limited to the time the grantor owned the property, while a "General Warranty" deed’s warranties also cover all the time the property was owned by prior owners.)

Quit Claim Deeds

A "Quit Claim" deed conveys to a Buyer only what the Seller actually owns, if anything, and provides no guarantee from the Seller to the Buyer that the Seller has any interest in the property to convey. The rule to follow for a person accepting a quit claim deed is "Buyer beware". If it later turns out that the Seller’s rights to use the property are encumbered by another person’s interest in the property, the Buyer is out of luck, and has no recourse against the Seller.

Life Estate Deeds

A "Life Estate" deed allows the owner to retain the right to continue the use of the property (live in the house) for the rest of his or her life, and leave the property directly to another person (referred to as the "Remainderman") upon his or her death. Use of such a deed will "avoid probate" but also creates an irrevocable gift to the Remainderman. If later the owner wants to sell the entire property, he or she must secure the permission of the Remainderman, and the Remainderman is entitled to a share of the sale proceeds and must join the owner in executing the deed to the buyer of the property.

Transfer on Death Deeds

A "Transfer on Death" deed is a relatively new type of deed that avoids the problems associated with the life estate deed and yet allows one to designate another person as a "Beneficiary" to receive the property upon his or her death without going through probate. The Beneficiary of a Transfer on Death deed receives no rights or interest in the real property during the life of the owner. Therefore, the owner can sell the real property anytime without the permission of the Beneficiary. Additionally, the designation of the Beneficiary can be changed at any time by the owner, without the knowledge or consent of the Beneficiary, by executing and recording a new deed.

Survivorship Deeds

A "Survivorship Deed" is a form of deed that is most commonly used when a husband and wife purchase real property together, although it can be used in other situations. This deed allows the owners to "avoid probate" upon the first death (but when the survivor dies, the property will be subject to probate administration). It is not recommended that such a deed be used between parents and children, siblings or unrelated parties unless you have consulted with a lawyer. With a survivorship deed, the last living person named on the deed becomes the 100% owner of the property. If the objective is to divide the property equally among several people, a survivorship deed should not be used.