Purchasing a home involves many important legal documents. The property deed is one of the most crucial to understand since it indicates the real estate’s owner.
You can easily confuse your house property deed with your title, and it can be difficult to differentiate between the types of property deeds. These deeds include warranty, bargain and sale, quitclaim, and special purpose.
Learn more about how property deeds work, what they entail, and when they are recorded.Find your lowest mortgage rate. Start here
In this article (Skip to...)
- What is a property deed?
- What’s the purpose of a property deed?
- Property deed vs. title
- Property deed contents
- Different types of property deeds
- Recording the property deed
What is a property deed?
A property deed is a legal document that proves the ownership of a particular home. This written record conveys or transfers property ownership or land from one party to another.Start your home buying process here
It contains detailed information about the property’s legal description, location, and any liens or encumbrances related to it. A deed must be in writing for it to be valid.
What is the purpose of a property deed?
Lyle Solomon, principal attorney at Oak View Law Group in Rocklin, California, explains the significant purpose of a property deed.
“It provides legal protection to the owner of the property and serves as evidence of ownership that can be used to resolve disputes over property rights. The deed also establishes the legal rights and responsibilities of the property owner,” he says.Verify your home buying eligibility. Start here
Min Hwan Ahn, an attorney in Philadelphia, agrees.
“The deed is significant because it outlines the terms and conditions of the transfer of ownership that must be signed by both parties and notarized to complete the sale of the home,” says Ahn.
The importance of a property deed should not be underestimated.
“It’s essential for anyone who owns or plans to own a property. If you are buying a home, you need a deed to prove that you own it. If you are selling a home, you need a deed to transfer ownership to the buyer. Without a deed, you cannot legally claim ownership of a property,” cautions Solomon.
Property deed vs. title
You’re probably wondering: What’s the difference between a property deed and a home’s title?
“The difference lies in their functions. A property deed serves as the physical document representing the transfer of ownership. A title refers to the legal ownership rights associated with owning a piece of real estate,” Ahn adds. “In other words, the deed facilitates transferring these rights – represented by the title – from one party to another.”Check your home buying options here.
The legal right to own a property is established by a comprehensive examination of public records related to the property.
“The title examination ensures that the property is free of any liens, claims, or other encumbrances that could affect ownership,” notes attorney Heather James, co-founding partner of Cook & James in Roswell and Woodstock, Georgia. “Verifying and having a clear title is essential for a buyer to acquire and maintain full ownership of a property.”
What are the contents of a property deed?
Depending on the jurisdiction, information included in a property deed can vary. But in general, a property deed includes the following items:Find your lowest mortgage rate. Start here
- Names and addresses of the involved parties, including the name of the current owner/seller (the “grantor”) and the name of the person or entity that will be buying/receiving the property (the “grantee”)
- Property description, which can include the location, size, and boundaries of the property
- Consideration/purchase price – the amount paid for the property
- Statement of conveyance – Although specific words are not required, a deed must convey the intention to transfer title
- Details on any restrictions or easements affecting the property
- Transfer date – the date that ownership of the property is transferred from the current owner to the new owner
- Signatures and notarization – the deed is signed by both the current owner and the new owner and is typically notarized to make it a legally binding document
- Legal description of the property, which is used to identify the property in legal documents.
What are the different types of property deeds?
Property deeds fall into several categories, including a warranty deed, bargain and sale deed, quitclaim deed, and special purpose deeds. We outline the details of each type below:
Warranty deeds provide the highest level of protection for buyers.
James points out that if any issues arise following the sale, a buyer with a warranty deed may be able to take legal action against the seller to seek compensation for any losses.
“It guarantees that no outstanding liens or encumbrances exist against the property being transferred, providing peace of mind for purchasers,” continues Ahn. “On the downside, this type of deed costs more for sellers due to necessary title searches required.”
Bargain and sale deed
With a bargain and sale deed, the seller makes no guarantees about the property. In other words, the buyer assumes all risks associated with purchasing and owning the property, which the seller has a right to sell.
“The advantage for sellers is that this deed is less expensive than a warranty deed and the seller is not liable for any issues that arise. That means the buyer assumes all risks associated with the property,” Solomon says.Ready to begin your home buying journey? Start here
A quitclaim deed transfers any interest the seller may have in the property without making/offering any warranties.
“It’s often used to clear title defects or transfer property within a family. Pros include simplicity and low cost; cons entail more significant risks for buyers due to lack of guarantees,” says Ahn.
Quitclaim deeds “are often used in situations where the parties know each other and there is already an established relationship of trust,” says James. “For example, if a divorcing couple owns a property together, one spouse may sign a quitclaim deed to give up their ownership interest in the property to the other spouse more quickly and easily.”
Special purpose deeds
Several different forms of special purpose deeds exist that each serves particular purposes. These include:
- Deed in lieu of foreclosure, which is used when a borrower is unable to repay a mortgage and wants to avoid foreclosure. “Here, the borrower voluntarily transfers the property to the lender to satisfy the debt,” Solomon says.
- Executor’s deed, which is used to transfer property from a deceased person’s estate to their heirs.
- Sheriff’s deed, which is used when a property is sold at a sheriff’s sale due to a court-ordered foreclosure.
- Tax deed, which is employed when a property is sold at a tax sale due to unpaid property taxes.
- Deed of gift, which is chosen when gifting property to another person.
Recording the property deed
When a property deed is “recorded,” that means the document is officially filed with the city recorder’s office or county. This process occurs usually after the property has either been sold, inherited, or gifted.Verify your home buying eligibility. Start here
“The main reason for recording a property deed is to establish legal ownership of the property. By recording the deed, the new owner’s rights to the property are established and protected,” Solomon adds. “Additionally, recording the deed creates a public record that can be used to verify ownership and settle disputes.”
Failure to properly record the property deed within the county or city recorder’s office can have serious legal ramifications. It may be challenging to prove ownership, and the property may be subject to competing claims. In a worst-case scenario, not recording the deed properly can trigger the loss of the property altogether.
“In addition to establishing ownership, recording the deed also provides notice to the public of the change in ownership. This can be important in cases where someone may have a claim to the property, such as a creditor or a tenant,” says Solomon.
The bottom line
Although these can be complicated legal instruments, you don’t have to be a lawyer or a title professional to understand the basics of what a property deed is and why it is necessary.
Work closely with your real estate agent, title company, and real estate attorney to ensure that your property deed is in order and legally valid.
Lastly, make sure you ask about anything related to the deed, its recording, or the transference of ownership process that you don’t understand.Time to make a move? Let us find the right mortgage for you