When you list your home for sale, setting the right asking price is important.
What is a deed?
A deed is a legal document used to transfer rights to an asset or a real property from one person to another. A deed is distinct from title, which proves the holder has rights to an asset or a property. A deed is commonly required for the transfer of real estate, while a bill of sale is generally used to transfer personal property.
A deed is always a written document, and can be referred to as a vehicle of property interest transfer. Deeds must be notarized and recorded in a courthouse or assessor’s office to be legally binding. In the language of deeds, the original owner of a property or asset is the grantor, and the new owner is the grantee.
There are various types of deeds, and they are determined by the kind of title warranties the grantor provides.
Grant deed: One of the most common types, a grant deed is used for the sale of private land to transfer property rights from one person to another at a pre-determined price. The grant deed protects both parties by ensuring that the seller owns the property, is in a legal position to sell the property, has not already sold it to another party, and that the property is free of debt.
General warranty deed: This deed is used to transfer ownership of property to a buyer. It explicitly guarantees that the seller owns the property and that the property is free of liens or claims from other parties. This deed gives the grantee legal recourse against any future claims to the property.
Bargain and sale deed: This deed is used during the transfer of property from a seller to a buyer. The property is sold, as opposed to being relinquished, and there is an exchange of money. This type of deed is also used for properties seized by a court of law.
Quitclaim deed: This is usually used by divorcing couples, family members or people who are well-acquainted with each other. It is used to transfer ownership of a property without any monetary exchange. However, a quit claim deed does not guarantee that the grantor owns the property or that the property is free of liens.
Deed of trust: This type of deed is required when a mortgage is used to buy property. With a deed of trust, legal ownership is transferred through a trustee, rather than directly to the person who takes out the loan. The deed of trust transfers title to be held as security in escrow for repayment of the loan.
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Example of a deed
Elaine is ready to retire and would like to transfer ownership of her home to her son, Bruce. Elaine hires a real estate attorney to prepare and file a quitclaim deed to transfer title to her home to Bruce. The attorney records the basic facts about the property, as well as details about Elaine and Bruce, both of whom need to be listed on the title, and then draws up the quitclaim deed. Because Elaine owns her home outright, there’s no need for Bruce to get a new mortgage as part of the process. All parties sign the deed before a notary, who signs and stamps the document, making it legally binding. The attorney then files the quitclaim deed with the local land records office.