What is a Property Deed and How Does it Work?

Buying or selling land can be exciting, but the process includes a lot of complexities, including legal documentation. Property deeds — what they’re for, how they’re used, and what you need to know about them — can seem daunting at first, but this guide will outline all that and more so you can be confident throughout the conveyance process. 

Contents

What is a Property Deed?

Types of Deeds

Modifying Your Deed

What is a Property Deed?

At their most basic, all deeds are used to convey ownership of a property. Deeds are written legal documents which use official terminology to prove who owns and may transfer a property to another person or entity. Importantly, they aren’t a title; titles are a concept proving ownership and are transferred along with the deed when a property changes hands. You can imagine the deed like a receipt for the title — it proves that you own the title.

Deeds have a number of criteria which must be met in order for them to be legal and binding: 

• They require the names of both the grantor (the seller) and the grantee (the buyer or recipient), and must be signed by the seller. 
• They must contain a sufficient description of the property and be notarized, typically by a title company or a real estate attorney. The specific notarization requirements can vary by jurisdiction.
• Finally, the seller must have the legal ability to sell the property and must have the deed delivered to the buyer. As part of the closing process, the deed should be recorded with the appropriate county office. 

Types of Deeds

There are several types of deeds used in real estate. Some types of deeds give the buyer greater or lesser protections after the sale, while others are used in special legal proceedings. All deeds are either private, which means they are transferred between individuals or entities, or official, which means they are transferred as a result of a legal procedure such as a court ruling. Most land sales will involve private deeds.

Deeds are also categorized by warranties, the most common of which are described below. Understanding these warranties, and the key differences between them, informs how shielded you’ll be from potential problems down the line.

General Warranty Deed

The most common type of property deed is the general warranty deed. This deed helps protect the buyer from the greatest range of claims against the title, making it the most secure. General warranty deeds include covenants, or promises backed up by the law, for a range of situations. Typically, this includes:

• The covenant of right to convey, which guarantees that the seller can legally sell the property.
• The covenant of seisin, which simply states that the seller is in legal possession of the property.
• The covenant of warranty, which guarantees that the seller will defend the property from any outside claims of ownership.
• The covenant of quiet enjoyment. This covenant helps the buyer stay free of disturbance or interference by outside parties down the line.
• The covenant of further assurances states that the seller will take any necessary steps to alleviate existing problems with the title.

The covenant against encumbrances, which guarantees that the seller has revealed all encumbrances currently affecting the property.

Special Warranty Deed

A special warranty deed differs from a general warranty in a few key ways. While a general warranty deed extends protection against defects beyond those which occurred during the seller’s possession of the property, a special warranty deed only promises that no defects arose during their possession of the title. This means that a special warranty deed is less broadly effective at protecting the buyer from older claims. Buyers who wish to avoid the potential pitfalls of this type of deed can request a general warranty deed as part of negotiating a sale.

Quitclaim Deed

Quitclaim deeds are unique in that they offer no warranties, unlike a general or special warranty deed. Instead, they are a way to give up any claim to ownership that might exist. When a seller signs a quitclaim deed, they aren’t necessarily guaranteeing ownership or taking responsibility of any kind; rather, they’re quitting any claim they might have had. These are typically used in transfers of property that don’t involve a sale such as divorce proceedings or when property is transferred between two family members.

Special Purpose Deeds

Most special purpose deeds serve to protect their officiants from any personal legal recourse, such as in the case of an estate’s executor, or as part of a court proceeding.

• Administrator’s and Executor’s Deeds: Administrator’s and executor’s deeds are used to transfer property to the former owner’s heirs; administrator’s deeds are used when no will exists, while executor’s deeds are used when one does.
• Gift Deed: A gift deed is used to convey a property to another individual or entity with no expectation of compensation.
• Deed of Trust: A deed of trust is used during the closing of property by a lender and a buyer. This deed carries the expectation that the buyer will repay the lender, until which time a trustee (a neutral third party) holds the title.

Sheriff’s Deed

A sheriff’s deed is issued after a foreclosure sale of residential or commercial property, depending on jurisdiction. This type of deed transfers ownership rights of a property to the successful winning bidder at auction. 

It is typically issued without any type of warranty and liens can often still exist on the property, such as special assessments and/or ad valorem taxes. Depending on jurisdiction, there is typically a “right of redemption” after the sheriff’s deed is issued. A right of redemption is a period of time in which the prior owner of the property may pay the amount owed and “redeem” the property.   

Tax Resale Deed

A tax resale deed is issued after a tax sale auction. A tax sale of real estate or commercial property is the result of when a taxpayer reaches a certain point of delinquency in their owed property tax payments. The successful winning bidder at a tax sale is issued a tax deed which entitles the purchaser to ownership of the property. In some jurisdictions, a tax deed will extinguish any liens that exist on the property.

Modifying Your Deed

There are plenty of reasons you might need to access a deed you already own. For example, you might need to add a name after getting married or transfer ownership after a relative passes away. If you need to access a deed to make such modifications, consider employing the services of a real estate attorney or other legal professional. They can assist you with locating your deed at your local clerk’s office, ensuring the deed contains all necessary information, and answer any questions you may have regarding the process.

Final Thoughts

Like all parts of buying and selling land, understanding the role deeds play in the transaction process will help you make confident decisions. Whether you’re an experienced investor or buying land for the first time, ensuring you have the best deed for your situation will help you make informed decisions, avoid future pitfalls, and make the transactions process smoother.