Which Type of Real Estate Deed Do I Need?
Last Updated: March 06, 2024
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Key Takeaways:
- A property deed is a written legal document that records real estate transfers from one party to another.
- It can be tricky understanding the various types of property deeds.
- To protect yourself, using the right deed when transferring or receiving property is essential.
Table of Contents
- What is a property deed?
- Is a property deed the same as a title?
- Can there be more than one deed for a property?
- Encumbrances and property deeds
- How to find your current property deed
- Types of property deeds
- Quitclaim Deed versus Warranty Deed
- Quitclaim Deed versus Gift Deed
- Contract for Deed versus Deed of Trust
- Transfer property with confidence
What is a property deed?
A property deed is a written legal document that records the transfer of real estate ownership from one party to another.
People may use a property deed when they sell or give away real property, divide a marital home during a divorce, fix a title defect, or put a piece of real estate in a trust.
For a property deed to be considered valid and properly executed:
- The parties’ names must be included and legible
- The real property must be identified by its address and legal land description
- The transferring party must sign the deed and have the legal capacity to sign
- The transferring party's signature must be witnessed and sealed by a notary
- The deed must be delivered to and accepted by the grantee
A property deed can only transfer an owner’s actual stake. So, if someone owns half of a property, they can only transfer their respective half.
Is a property deed the same as a title?
No. Although closely related, a deed is distinctly different from a title. A property deed is a physical document that can record a real estate property transfer.
On the other hand, a title refers to one’s ownership of a piece of property. 'Title' is a concept, not a tangible document.
Regarding a house, you may hear people say their name is “on the title.” What they’re saying is that they legally own the property and have all the legal rights associated with ownership, such as the right to transfer their interest. The official documentation that shows who the title belongs to is called the certificate of title.
Despite the legal difference between these terms, there is overlap in the way many people use them in conversation. For example, people commonly refer to the certificate of title as the “title,” “deed,” or “title deed.”
Can there be more than one deed for a property?
Over time, a real estate property’s ownership usually changes multiple times. Therefore, therecan be more than one deed for a piece of real estate throughout its lifetime.
In addition, some situations require people to use a combination of deed documents to complete one property transfer. For example, if a buyer borrows money to purchase a home and uses a Deed of Trust, the trustee will need a Deed of Reconveyance to complete the transfer.
Encumbrances and property deeds
Regarding property law, encumbrance is a broad term that refers to a legal claim against a piece of real estate from a non-owning party. An encumbrance can be any claim that prevents a clear title, restricting an owner’s ability to transfer their property.
An encumbrance can be financial, such as a lien. A lien is a claim used as collateral to satisfy a debt. For example, when a homeowner has a mortgage, the lender will place a lien against the home. The lien allows the lender to seize and sell the home if the owner cannot pay the mortgage.
An encumbrance can also be non-financial, such as an easement. An easement is a property right that allows one party to use land or property for a specific reason. For example, a city may have an easement if a public power pole is on a homeowner’s property.
How to find your current property deed
For a property transfer to be legally recognized, you must file the relevant property deed with your local recorder of deeds. All 50 states require citizens to file their deeds with a local recorder of deeds. Filing a deed ensures that it becomes a part of the public record.
To find your property’s most recent deed, you can contact your county’s recording office to view it or obtain a copy. Often, recording offices are located in courthouses.
Types of property deeds
There are quite a few different types of property deeds, each with its unique purpose and characteristics. We offer seven types of deed document templates:
1. Warranty Deed
A Warranty Deed guarantees that a property’s title is free from encumbrances while transferring its ownership. Warranty Deeds are used in most home sales between unrelated parties because they offer the most protection for buyers without established trust. If any title issues arise after a sale, a Warranty Deed ensures that the seller remains responsible.
There are two types of Warranty Deeds: special and general.
Under a special Warranty Deed, the grantor guarantees that they have done nothing during their period of ownership that would create defects on the property title but provides no guarantees to the title before their ownership. In this sense, a special Warranty Deed provides a limited guarantee.
In contrast, a general Warranty Deedguarantees that no encumbrances exist. The grantor takes responsibility for any prior claims or liens that could be found later. Buyers or recipients of property who want the utmost protection should request a general Warranty Deed.
2. Quitclaim Deed
A Quitclaim Deed does not guarantee that a property’s title is free from encumbrances while transferring its ownership, meaning there could be liens or other claims against the property that cloud the title.
Because of the lack of guarantees, Quitclaim Deeds are quick and convenient ways to transfer property ownership. They are mostly used for transfers that do not include a sales component.
People with trusted and established relationships, such as family members, commonly use Quitclaim Deeds. For example, an aging parent may use a Quitclaim Deed to easily transfer their house to their children. During or after a divorce, if one spouse is keeping the marital home, the other may use a Quitclaim Deed to transfer their ownership interest.
3. Survivorship Deed
A Survivorship Deed allows property owners to transfer real estate to multiple recipients, creating a joint tenancy. Under a joint tenancy, owners have the right of survivorship. This means that when one property owner dies, their ownership interest automatically transfers to the surviving owner(s). When one owner remains, they have sole ownership of the property.
Because joint tenants have the right of survivorship, Survivorship Deeds can prevent a piece of real estate from having to enter the probate process after a joint owner passes away.
Survivorship Deeds can be useful between spouses. Typically, spouses will be joint tenants when they buy a home together. However, if a newlywed owned a property before their marriage and wants to transfer half its ownership to their spouse, they can use a Survivorship Deed.
A parent may use a Survivorship Deed to add their adult children’s names to their property title. Once the parent passes, the property will already belong to the children without the involvement of the parent's Last Will and Testament or Living Trust.
Survivorship Deeds can be used in every state except Louisiana.
4. Gift Deed
A Gift Deed allows a person or organization to transfer money or property as a gift. In terms of property, a Gift Deed can transfer a house, a car, shares, and more. Gift Deeds facilitate the transfer of ownership and show that a gift is being given without payment in return.
It is very common for people to use Gift Deeds to transfer a gift to a family member, such as a parent gifting a house to a child. Also, people can use Gift Deeds to donate substantial sums of money or valuable assets to charities.
There are two types of Gift Deeds: revocable and irrevocable. A revocable Gift Deed is one you can cancel in the future. An irrevocable Gift Deed can't be canceled or withdrawn.
5. Contract for Deed
A Contract for Deed is not a true property deed. Instead, as its name suggests, it’s a contract that binds a seller to use a deed to transfer a property in the future.
When a real estate owner is selling their property and allowing their buyer to pay them in installments, a Contract for Deed allows the owner to keep the property’s legal title under their name while the buyer makes payments. When a seller accepts payment in installments, it is called seller financing.
Under a Contract for Deed, the buyer obtains the equitable title while paying back the seller. This is not the same as having a legal title. Equitable title is the right to possess a property and eventually obtain ownership. Therefore, the buyer has the right to live in the property, but the seller does not legally transfer the title until the purchase price is fully paid.
Contracts for Deed are common when buyers cannot obtain financing through traditional methods, like a bank.
6. Deed of Trust
A Deed of Trust transfers a property’s legal title to a neutral party while a buyer pays back their lender. This type of deed involves a lender, a borrowing buyer, and a trustee.
Most people who are buying real estate have to borrow money or take out a mortgage to do so. Lenders have to protect their interests in case a borrowing buyer ends up defaulting on their loan. Documents like Deeds of Trust allow lenders to ensure they will be reimbursed—even if the buyer cannot pay.
With a Deed of Trust, the buyer often gives the lender a Promissory Note when the lender provides the loan. As collateral, the buyer uses the Deed of Trust to transfer the property’s legal title to a third-party trustee. If the buyer defaults on the loan, the trustee can take the property and use it to pay back the lender.
The following states use Deeds of Trust:
- Alaska, California, Colorado, District of Columbia, Georgia, Hawaii, Idaho, Maine, Massachusetts, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, North Carolina, Oregon, Rhode Island, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wyoming
The following states use Mortgage Agreements:
- Connecticut, Delaware, Florida, Iowa, Indiana, Kansas, Louisiana, New Jersey, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, Vermont, and Wisconsin
The following states allow either Deeds of Trust or Mortgage Agreements:
- Alabama, Arizona, Arkansas, Illinois, Kentucky, Maryland, Michigan, Montana, New Mexico, New York, and South Dakota
7. Deed of Reconveyance
A Deed of Reconveyance transfers a property’s legal title from the trustee to the borrowing buyer, once the buyer fully pays back the loan.
Deeds of Reconveyance are the counterpart to Deeds of Trust.
Deeds of Reconveyance have to be filed and recorded. A Deed of Reconveyance shows that the lender no longer has a security interest in the home. Once the buyer has received a Deed of Reconveyance, the trustee loses the right to claim the property on behalf of the lender.
In states that allow Mortgage Agreements, people must use a Satisfaction of Mortgage rather than a Deed of Reconveyance.
Quitclaim Deed versus Warranty Deed
Quitclaim and Warranty Deeds are the same in function — they transfer property interest. However, they differ significantly when it comes to protection.
A Quitclaim Deed does not guarantee that a property is free from interests held by other parties, such as an ex-spouse or bank. Quitclaim Deeds are simple and straightforward, making them fast to execute.
A Warranty Deed guarantees that a property’s title is free from liens, debts, and any other interests that others could hold. Because of the guarantee, many transferring parties will buy title insurance to protect themselves.
Quitclaim Deed versus Gift Deed
Quitclaim Deeds and Gift Deeds can transfer a piece of real estate without guaranteeing that it is free from any encumbrances.
While Quitclaim Deeds can only transfer real property, Gift Deeds can also transfer money and personal property.
In addition, a Gift Deed cannot transfer something if the recipient is paying or trading for it. In contrast, although it is uncommon, a Quitclaim Deed can involve consideration.
Quitclaim Deeds and Gift Deeds may vary when it comes to taxation. Someone using a Quitclaim Deed to sell a house may encounter real estate transfer tax. If someone is giving away a property, whether as a gift or inheritance, it could be exempt from transfer tax but subject to gift tax.
Contract for Deed versus Deed of Trust
The main difference between a Contract for Deed and a Deed of Trust is seller financing. They also differ because the latter is between a buyer and their lender, not their seller.
Under a Contract for Deed, there is seller financing, meaning the buyer pays the seller in installments. The seller keeps the property’s legal title under their name until the buyer fully pays them.
The seller of the property is not involved with a Deed of Trust. Instead, the buyer obtains financing from an external lender. The external lender provides the money for the buyer to pay the seller in full. To protect the lender’s interests, the property’s title goes to a third-party trustee who can seize the property if the buyer ever defaults on the loan.
Transfer property with confidence
When you are involved in a real estate transfer, it can be difficult to know whether you are using the right documents and protecting yourself properly. By understanding the different types of deeds, you can have much more certainty in transferring or receiving your property.
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