Understanding Property Deed Transfers and Types

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A deed is a legal document that transfers property ownership from one person to another. Most deeds have covenants, or guarantees, that describe the legal promises the previous owners make to the new ones about the condition of the property and the extent of their ownership rights. 

While most deeds serve the same main purpose of recording a change in ownership, there are also multiple types of deeds that serve varying purposes. Learn more about the differences between the most common deed types so you can better understand and identify which one you need for your individual situation.

What Is a General Warranty Deed?

General warranty deeds have six covenants that explain the rights you’ll have as a new owner. These are the most preferred deed type because they offer the most protection. Real estate agents and attorneys often encourage the people they represent to use these. The six covenants of a general warranty deed are covenants of seisin, right to convey, against encumbrances, warranty, quiet enjoyment and further assurances. 

The covenant of right to convey ensures that the seller owns the property and has the legal right to sell it. If multiple people own the property, this covenant ensures that they all agree to the sale. The covenant against encumbrances is a guarantee from the seller that there are no legal encumbrances on the property. That means no creditors, neighboring property owners or lien holders have any lingering interests in the property. This is yet another guarantee that you’ll have full rights to use the property as you wish, within the standards of local ordinances. It also means that no third party will try to enforce any of its legal rights against your newly purchased property. The covenant of quiet enjoyment promises that there are no third parties who will try to interfere with the buyer’s ownership rights. 

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The covenant of further assurances protects the buyer’s interests against future issues that may arise. Suppose a lienholder tries to assert rights against the property due to an unpaid bill for the seller five years after the purchase. Because the seller agreed to the covenant of further assurances, the seller is legally responsible for assisting the buyer in fixing the problem. 

In simple terms, a seller who signs a general warranty deed says, “I have full rights to sell this property. I am transferring those full ownership rights to you. I guarantee that no one else will infringe upon your rights. I will help you fix the problem if someone tries to deny your property ownership rights.”

What Is a Special Warranty Deed?

A special warranty deed, also known as a limited warranty deed, offers many of the same covenants as a general warranty deed. However, there’s a time limit on the extent of those guarantees. A special warranty deed transfers ownership of a property by including its legal definition, the seller’s name and the buyer’s name.

With this type of deed, the seller guarantees that they’re the legal owner of the property and have the right to sell it. The seller also guarantees that the buyer should be able to enjoy the property without any encumbrances. Still, those guarantees only last for the duration of time that the seller has owned the property. 

For example, suppose you purchase a property and receive a special warranty deed. The seller you bought it from has owned the property since 1975. You’ve just received a letter from someone who claims to be the one-third owner of your property because it was sold without getting the signatures of all three previous owners back in 1970. You are responsible for handling this problem, and the previous seller isn’t responsible for assisting you. The problem happened five years before the seller took ownership, and a special warranty deed only covers the time the seller owned the property. Although a special warranty deed offers less protection, problems like these are very rare if attorneys do title searches and buyers purchase title insurance each time a property is sold.

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In terms of buyer protection, special warranty deeds are the second-best type of deed. This is because the guarantees only cover the period the seller owned the property. Special warranty deeds are common in commercial property sales because commercial owners may not be as intimately acquainted with the details of a property as a homeowner would be. In residential property sales, commercial sellers, such as a bank selling a home in foreclosure, also opt for special warranty deeds for the same reason. A bank may not be able to make guarantees regarding the previous owner who defaulted on their mortgage loan. 

What Is a Quitclaim Deed?

A quitclaim deed is a deed that offers no protection to the buyer because it has no covenants. The only guarantee in a quitclaim deed is that the seller has legal rights to sell. Because there are no guarantees about the condition of the title to the property or the existence of encumbrances, there’s no need for a title search. Transferring ownership using a quitclaim deed is a much faster process than other deed types.

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A quitclaim deed represents an “as is” transfer of property. The seller makes no guarantees, and the buyer accepts full responsibility for easements, liens and any other issues arising from owning the property — even if the seller is fully responsible for and aware of the issues at the time of transferring ownership. 

Rather than being used for property sales, quitclaim deeds are more often used for gifting property or handling title issues between family members. This isn’t a wise type of deed to use if you’re buying property from a stranger. If a divorce decree requires a spouse to give land to their soon-to-be ex, they may use a quitclaim deed. If a grandmother wants to give property to her grandchild, she might use a quitclaim deed. The buyer in the special warranty deed example above could negotiate with the supposed one-third owner of the property to sign a quitclaim deed to relinquish their one-third ownership to the new buyer. When purchasing or selling property, it’s important to understand the guarantees that come along with each deed type. Although it’s not always necessary for selling property, involving an attorney in the transaction is wise for ensuring your rights are properly addressed with the ideal type of deed.

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