In very general terms, a deed is the legal document that transfers ownership of real estate from one person or entity to another person and/or entity. While the requirements for legally valid deeds vary widely from state to state, there are some different types of deeds that are consistently used in real estate transactions, including warranty deeds, grant deeds, and quitclaim deeds. Additionally, there are different methods by which a person or multiple persons can take title to real estate pursuant to one of these deeds.
Warranty deeds are designed to protect the buyer from any problems that might arise in the context of a real estate transaction. Used most frequently in the buying and selling of real estate, warranty deeds not only transfer ownership of real estate from seller to buyer, but these legal documents constitute explicit warranties, or promises, that the seller is making to the buyer regarding the real estate transaction. For instance, warranty deeds typically contain a provision that the buyer is transferring good title to the real estate to the seller, i.e. that there are no conflicting claims of ownership or problems with the seller’s title to the real estate.
Similarly, grant deeds are legal documents that transfer ownership of real estate from seller to buyer. As is the case with warranty deeds, grant deeds contain promises that the seller has good title to the real estate, and that the seller has not already transferred the title to another person or entity. The major difference between grant deeds and warranty deeds is that where promises are explicitly made in warranty deeds, grant deeds contain only implicit promises.
On the other hand, quitclaim deeds transfer a person or entity’s interest in a parcel of real estate, but make no warranties or promises to the buyer or the person who is receiving the real estate. Quitclaim deeds are commonly used by divorcing couples who wish to transfer real estate from both spouses to one spouse, or when people leave real estate to family members through a trust, a will, or another estate planning document. It is important to note, however, that transferring legal title via quitclaim deed in a divorce situation does not solve the problem of a jointly held mortgage that is secured by the real estate. Quitclaim deeds also are useful if there is some sort of “cloud” on the title, or some conflicting claims of ownership or unclear title history. By quitclaiming his or her interest in a parcel of real estate, the grantor can effectively clear the title to the property and clarify its ownership.
Whatever type of deed is utilized to transfer ownership of real estate, people can take legal title to the real estate in different ways. Married persons generally take title to real estate as joint tenants. As a result of this ownership designation, if one spouse passes away, the surviving spouse automatically receives full ownership of the deceased spouse’s share of the property. Furthermore, in most states, if two or more people own a parcel of real estate, they all must hold equal shares of the property. Thus, in that situation, if one joint tenant passes away, the remaining joint tenants receive the deceased joint tenant’s interest in the real estate in equal shares.
Multiple persons can also hold title to real estate as tenants in common. In many states, unmarried couples who hold real estate together are typically deemed to be tenants in common. The main difference between tenants in common and joint tenants is that if one tenant in common passes away, the surviving tenant(s) in common do not automatically receive the deceased tenant’s interest in the real estate. Rather, the deceased tenant’s interest would be passed down to his or her heir(s) according to the estate plan in place, or, where there is no estate plan, according to the laws of intestate succession. Furthermore, in most states, tenants in common are permitted to hold title to real estate in unequal shares.
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