Doing the deed that's right for you?

With so many deeds to consider, it's worth understanding what a deed is and which applies to your transaction?

What is a deed?

A deed is the very document that is the means by which real estate ownership (“Title”) is transferred from one party to another in the purchase, sale or other transaction.

What are the different types of deeds?

There are a range of deeds including the Warranty Deed, Quitclaim Deed, Deed of Trust and Grant Deeds. Here in New York we often use what is referred to a Bargain and Sale Deed.

What is the fundamental difference?

The essential element to consider when selecting a deed type is whether you will have adequate protection for your ownership of title which includes the viability of title insurance. Let’s take a look Quitclaim Deeds versus Bargain and Sale Deeds to better understand this idea.

Quitclaim Deeds

This deed has been referred to as the “Quick Deed” or the “As Is Deed”. It simply conveys any title, interest or claim that a seller has to a buyer without any guaranty that the title is valid. The person acquiring the property (“Grantee”) gets whatever interest is given by the person transferring the property (“Grantor”).

The most important reason to avoid a quitclaim deed is because it severs an express or implied warranty of title. This means the seller is granting whatever they may own which in fact may be nothing, or something other than what you might think you are acquiring. Accordingly, there is inherent risk involved here and you should consult a title company and real estate attorney before relying on this type of deed.

The process can be completed much faster for borrowers who refinance their mortgage loans with the original lender. However the option is still available even if the new lender is going to be different from the original lender.

Bargain and sale deeds

These are the form of Warranty deeds often used in New York (Colorado, Vermont, Washington and Wyoming). The important option with this deed is that it can expressly include Covenants Against the Grantor which protects the buyer by having the seller covenant that title is indeed good. This means that Grantee has legal recourse against future claims to the property, because the Grantor guarantees that they have sole claim to the property and no other entity has any claim or lien on either the land or the home structure. A title insurance policy usually isn’t extinguished in such a transfer and so is the recommend option.

Conclusion

In most cases I would advise transfer of title to the property that you are purchasing to be in the form of a Bargain and Sale Deed with Covenants Against the Grantor (otherwise known as a Grant or Warranty Deed) as opposed to a quitclaim deed.