By JODI SUMMERS
A deed is the document that transfers ownership of real estate. It contains the names of the old and new owners and a legal description of the property, and is signed by the person transferring the property. Several different types of deeds can be used to convey real estate.
America’s most popular type of deed, a grant deed transfers ownership and implies certain promises that the seller makes to the buyer regarding the condition of the title to the property. The grant deed contains three warranties: 1. The Covenant of Seisin — A promise by the grantor that he owns the estate he is conveying. 2. Covenant Against Encumbrances — A promise by the grantor that the property is free and clear of encumbrances (liens, loans, mortgages, taxes, etc.), other than what has been disclosed by the seller. 3. The Covenant of Quiet Enjoyment obliges the seller to defend the title against future claims on the property.
Insist upon obtaining a grant deed when any of your properties are paid in full.
A warranty deed transfers your ownership and explicitly promises the buyer that you have clean title to the property, among other promises. A grant deed replaces its use in California.
When a seller uses a bargain and sale deed, the buyer does not get the promises conveyed in a grant deed, and the seller has no obligation to defend the title.
QUITCLAIM DEED With a quitclaim deed, the grantor disclaims any interest they may have in a piece of property, and passes that claim to the grantee. A quitclaim deed neither warrants nor professes that the grantor’s claim is valid. Quitclaim deeds may be used for transfers between family members, gifts, to eliminate clouds on title, or in other special or unusual circumstances — such as selling properties seized for nonpayment of taxes.
The quitclaim deed will not promise that the buyer will obtain clear title to the property. Such assurances must come from a title insurance company or an attorney who performs a title search.
In the Commonwealth of Massachusetts, a quitclaim deed is known as a release deed.
A trust deed (a.k.a. deed of trust) is another version of a mortgage. A trust deed transfers title to land to a “trustee,” which holds the land as security for a loan. When the loan is paid off, title is transferred to the borrower/buyer.
Also known as a “contract of sale,” “land sale contract” or “installment sales contract,” a contract for deed is used with seller financing. The contract for deed states that the seller keeps title to the property until the buyer pays off the loan.
The person who is transferring the property should take the deed to a notary public, who will verify that the signature on the deed is genuine. The signature must be notarized and stamped before the deed will be accepted for recording.
The deed should be recorded to be valid. Take the signed, original deed to the land records office in the county where the property is located. The clerk will take the deed, stamp it with the date and record location numbers, make a copy and give the original back to you. In the event of conflicting claims to a property, the first grantee to record their deed usually wins at the courthouse.
“First in time is first in right” is the basic rule.
No matter what type of written real estate deed you receive, insist on obtaining an owner’s title insurance policy. The entire title insurance industry depends on interpreting both state recording laws and their application to a specific document affecting a particular property.
“When is the last time you heard of a homeowner encountering a title insurance claim?” asks real estate columnist Bob Bruss. “Although I’ve been buying and selling real estate almost 40 years, I have never had to file a title insurance claim, nor have I ever heard of a title insurer paying a title policy claim.”
For a one-time premium paid at the time of property purchase, the owner’s title policy remains in effect as long as the insured owner or the heirs own the property.
If title insurer makes a mistake that isn’t discovered until many years later, the title insurer still must pay the insured property owner either (1) the diminished value of the property if the title insurer failed to disclose a recorded document, (2) cost of correcting the error, or (3) the full policy limit if the title was completely defective.
Jodi Summers is Director of the Investment Division at Boardwalk Realty. Contact her at or call (310) 309-4219. Visit her Web sites at www.SoCalInvestmentRealEstate.com or www.santamonicalandmarks.com.
Originally published in the Santa Monica Daily Press print edition on December 6, 2006. Read the original PDF.