To understand a deed transfer in its various forms, it is important to understand the purpose of the deed itself. Deeds are similar to vehicle titles — by legal registration, both deeds and vehicle titles identify the person or entity that owns certain property.
Of course, a deed identifies the owner of real estate, and the term “deed transfer” refers to transferring legal ownership of a home or undeveloped land from one party to another.
Every deed transfer has three components: the grantor, or the person transferring the property; the grantee, or the person receiving the property; and a legal description of the property in question. To be legally binding, all deeds must be signed by the grantor.
Three common types of deeds effectively transfer ownership: warranty deeds, grant deeds and quitclaim deeds. Each of these deeds legally transfer property, but they do so in different ways.
Familiar to anyone who has ever bought a home, warranty deeds are typical in real estate purchases. Warranty deeds come with three guarantees:
- The property has a free and clear title.
- The property is free from liens other than any disclosed to the grantee by the grantor.
- The guarantor of the deed will defend the title if necessary.
Grant deeds are similar to warranty deeds, but they lack the warranty. In other words, grant deeds have no guarantor who will defend the title if the deed is contested by a third party.
Grant deeds confirm that the property is being transferred from the grantor to the grantee and that it has not been sold to another party. These deeds also guarantee that no liens (other than any previously disclosed) are on the property.
Quitclaim deeds are straightforward documents that simply transfer property from the grantor to the grantee. These deeds are often used to transfer property between spouses or other immediate family members.
Sometimes, however, quitclaim deeds clear up any “clouds,” or irregularities, on the title. Since quitclaim deeds contain no guarantees, they are inappropriate for buying and selling real property.
Regardless of the type of deed involved, all deeds transfer ownership from one party to another. To be legal, every deed must be signed by the grantor.
In addition, some states deeds require deeds to be recorded in the local county courthouse before they are considered legal. However, even in states that do not have this requirement, lawyers highly recommend recording a deed since it establishes the grantee’s ownership.
Max often writes about a variety of subjects. He works at Courthouse Direct, which offers easy online access to public records, deed information and other court documents.