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A deed is a legal document that acts as proof of ownership of real estate according to the prevailing rules and regulations of a certain place or location. It is an inscribed writing that transfers or confirms possession of a property from one party to another. A deed contains crucial facts about the property, such as its legal description, boundaries, and any encumbrances or restrictions on its use or transfer.

This blog will provide an in-depth analysis of deeds, their various types, make-ups, and their relation with real estate ownership. If you are a first-time home buyer or an experienced real estate investor, this blog post will help you comprehend the importance of deeds in the field of property ownership.

Steps to Formulate a Deed

A straightforward process of creating and transferring ownership is transferring it with a deed; however, this might vary depending on the state in which the property is located. These are general steps to follow in creating and transferring ownership through deeds:

  1. Draft the Deed. Firstly, the deed is created. A lawyer may do this for real estate, a title firm, or using an online available form for deeds. It is important to ensure that the right kind of deed is used and all required elements are included.
  2. Execute the Deed. For a deed to be enforceable, it must be signed by those involved in the transaction. On this note, it is advisable to follow specific guidelines given by the particular state where the property is situated.
  3. Record the Deed. Upon execution, it should be recorded with the county recorder office where such property is situated, thus creating a public record of the transfer of ownership and thereby putting potential third-party claimants on notice.
  4. Transfer Ownership. Once this deed has been recorded, property ownership changes hands to the buyer, and from then onwards, they can possess it and also is bound by any obligations arising from their ownership, like tax obligations as well as mortgage payments.

Types of Deeds

Real estate transactions involve several types of deeds, and each is used for a different purpose. These are:

  • General Warranty Deed: In real estate transactions, a general warranty deed is the most commonly used type of document. It provides maximum protection to a buyer as a seller guarantees that they are the legal owner of the property without any outstanding claims against it or any other form of encumbrance. The seller also undertakes to defend the buyer’s title from third-party claims.
  • Special Warranty Deed: This type of deed is similar to a General warranty deed, but it only covers the period when the seller owned the property. Therefore, this means that the seller will not be liable for any defect or title problem that emerged during his/her ownership of the property.
  • Quitclaim Deed: A quit claim deed does not provide assurances or warranties about anything whatsoever regarding property ownership changed hands. According to this, sellers are not liable for any defects or title issues arising after transferring ownership rights. Quitclaim deeds are common in divorce cases and among family members who want to transfer real estate through inheritance.
  • Bargain and Sale Deed: It is a deed that conveys an interest in real property without providing warranties or guarantees but implies the seller’s ability to sell and lack of encumbering it in any way.
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Important Parts of a Deed

A deed is a legal document that has several important parts. Although the details in a deed may differ depending on the kind of deed being used, some parts are common:

  • Parties Involved: The transaction parties, including the buyer and seller, are recognized in a deed. It will also mention the legal description of the property being transferred.
  • Consideration: This is the amount of money or other value given for the property. This is usually indicated in the deed, though some states demand that it be separately recorded.
  • Restrictions Regarding the Property: The restrictions imposed on the property by any encumbrances are stated in the deed to limit its transfer or use.
  • Signatures: The concerned individuals must sign this document for it to be valid. Sometimes, even third-party witnesses notarize such deeds.

Restrictions of a Deed

Deed restrictions and encumbrances can have an impact on the use and transfer of property. These limitations are usually written in the deed and they may prevent the purchaser from utilizing the property in a specific manner or developing it. Some common types of deed restrictions and encumbrances include:

  • Easements: An easement is a right that allows certain people to utilize part of your land for particular uses, for instance, a utility company’s right to install or maintain its utility lines on a part of your land.
  • Covenants: Covenants are agreements that limit the use of property between a buyer and seller. For instance, residential purposes may be strictly required by covenant or certain forms of enterprise forbidden on site.
  • Liens: A lien is an entitlement to property as security for debt. Should the debt remain unpaid, foreclosure might be permitted by the person holding the lien.
  • Mortgages: This is a form of lien used to secure loans made available for the purchase of the property. If loan borrowers’ default occurs, such a lender has a right to foreclose its mortgage.

Common Errors to Avoid When Creating a Deed

Deeds can be complicated legal documents, and errors in their creation or execution can come with complications. Common problems with deeds include:

  • No Legal Description: A deed must have a legal description of the property being transferred. If the wrong or incomplete legal description is used, it can create difficulties in transferring ownership.
  • False Deeds: Fraudulent conveyances may be made by people who have no right to sell or transfer the property. Buyers are supposed to always question whether the seller is who they claim to be and confirm that they have the right to dispose of the land.
  • Unregistered Deeds: If a deed has not been recorded in the county recorder’s office, it may not be valid. This could affect property transfer and also limit the buyer's chances of disposing of their property.

These issues must be considered when creating and transferring ownership through a deed by having a real estate lawyer or title company who is competent enough.

Key Terms for Deeds

  • Grantor: The person or entity that gives the property ownership to a new owner through a deed.
  • Grantee: The individual or organization that is given rights to own the property through a deed.
  • Consideration: This is the price or value exchanged between the grantor and the grantee for the transfer of ownership.
  • Legal Description: A complete description of the property being transferred includes its boundaries, dimensions, and other features used to identify it.
  • Recording: This process involves submitting the deed to the county recorder’s office, which keeps it on public records, thereby creating evidence of property transfer for good.

Final Thoughts on Deeds

A deed is an important legal document that confirms real estate ownership. Anyone involved in buying or selling property needs to know about different types of deeds and how they relate to real estate ownership. When done correctly with assistance from professional experts engaged in these transactions, buyers, and sellers can conduct their business efficiently while minimizing potential legal problems.

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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