What is a Deed in Real Estate?
The condensed definition of a property deed is a legal document that transfers ownership of real property (land and anything attached to it, like buildings or roads) from a grantor (seller) to a grantee (buyer). There's a lot more to it than that, but Unreal Estate is here to break it down so you know everything that is involved with property deeds.
A property deed is a written and signed legal instrument. It's used to transfer ownership of the real property from the old owner (the grantor) to the new owner (the grantee), although it wasn't always this way. Historically, real property was transferred through a ceremonial act known as "livery of seisin." In this act, the person transferring the land handed a twig or clod of turf from the land to the person taking delivery of the land. A verbal or written statement often accompanied the gesture, though it was the livery of seisin that legally transferred the title to the property. Today, the title to real property is conveyed by a paper deed.
Deeds can also be classified as either official or private. Official deeds are those that are executed as a result of a court or legal ruling. Private deeds, on the other hand, are executed by a deal struck between individuals or businesses.
Before any transaction can be completed, there are a few essential elements that must be included in the property deed for it to be legally valid. Here's a quick rundown:
The deed must be in writing. While most deeds are completed on printed forms, there is no legal requirement that any specific form is used as long as the essential elements are included.
The grantor must have the legal capacity to transfer the property and the grantee must be capable of receiving the grant of the property. A person who is competent to make a valid contract is considered competent to be a grantor.
The grantor and grantee must be identified in such a way as to be ascertainable.
The property must be adequately described.
Operative words of conveyance must be present. All standard form deeds include the necessary legal language that actually transfers the property.
The deed must be signed by the grantor or grantors (if the property is owned by more than one person).
The deed must be legally delivered to the grantee, or to someone acting on the grantee's behalf.
The deed must be accepted by the grantee. Typically, deeds are accepted by the grantee but in certain circumstances, the grantee could reject delivery of the deed.
Deeds can be classified in numerous ways, but broadly, deeds can be classified as warranty, quitclaim, and special purpose.
General warranty deeds give the grantee the most protection. With this type of deed, the grantor warrants that they have not conveyed the property to anyone else and that there are no encumbrances (liens or other claims) on the property.
Special warranty deeds give the grantee more limited protection. With this type of deed, the grantor only warrants that they have not conveyed the property to anyone else during their ownership and that there are no encumbrances on the property during their ownership.
Quitclaim deeds give the grantee the least protection under the law. With this type of deed, the grantor is not making any warranties or guarantees about the property. They are simply transferring whatever interest they have in the property to the grantee.
While warranty deeds are the most common type of deed used in real estate transactions, quitclaim deeds may be used in certain situations such as when a property is being transferred between family members or when there is a lack of clarity on the ownership of a property.
By understanding the different types of deeds and the essential elements that must be included, you'll be better equipped to navigate the real estate world. Remember, knowledge is power and in the world of real estate, that couldn't be more true.
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