What kind or Deed do I want to receive when buying / selling property?

A deed is a legal document which conveys ownership to real property. To be valid between the Grantor and the Grantee, the deed is not required to be recorded. To be valid against the world, a deed must be recorded in the records of the County where the property is located. Hence, you should always record the deed. Once the deed is recorded, even if the original deed is misplaced, lost, stolen, or destroyed, title to the property is owned by the person or entity named on the deed as the Grantee. To transfer ownership of the real property to another, the current owner must execute a new deed identifying the recipient or buyer of the property as the Grantee. To be valid, the deed must be delivered to the Grantee. There are many different types of deeds and types of deed ownership, all of which convey different legal rights.

Warranty Deed

A Warranty Deed, sometimes called a General Warranty Deed, is a deed that transfers all rights of the Grantor to the Grantee, the Grantor also makes certain warranties or promises to the Grantee. These promises typically include the Grantor's promise that Grantor has the rights in the property that Grantor purports to transfer to Grantee, that Grantor has the right to convey the property, that the property is free from liens or claims of third parties, that Grantee is entitled to be in possession of the property and that Grantor will compensate Grantee for any damages sustained as a result of any claims against the property by third parties. A Warranty Deed is the type of deed most often used in ordinary purchase and sale transactions. If you are buying property you should insist on receiving a General Warranty Deed.

Limited Warranty Deed

A Limited Warranty deed is deed that only warrants the title for the time in which the seller owned the property. Stated another way, the Seller is only providing a Warranty that says that he or she did nothing to effect the title to the property that will not be canceled or satisfied at or prior to granting the deed to the buyer. Therefore, a Limited Warranty deed’s warranty is limited to the time the grantor owned the property, while a Warranty Deed, sometimes called a General Warranty Deed warranties title without limitation. If you are selling property you should try to only provide a Limited Warranty Deed to limit your potential liability.

Quitclaim Deed

A Quitclaim Deed is a deed that simply transfers to the new owner, the Grantee, whatever interest in the property that may be held by the person granting the deed. The Grantor of the deed makes no warranties or guarantees about the quality of Grantor's interest in the property, or even if the Grantor has any interest, and no warranty is provided regarding whether or not there are any liens against the property or claims by any third parties. A Quitclaim Deed is most often used in non-sale, or gift transactions. Quit claim deed are also very common in divorce settlements.

Types of interests within a deed:

Tenants in Common

To own property as Tenants in Common means that multiple owners have concurrent ownership with no right of survivorship. The individual tenant in common owner can transfer their interest in the property by deed or by Will. Each Tenant in Common is entitled to possession of the whole estate. If the deed conveying property to multiple owners does not state otherwise, the owners are presumed to own the property as Tenants in Common.

Joint Tenants with Rights of Survivorship

To own property as Joint Tenants means that multiple owners have concurrent ownership with the right of survivorship. Right of Survivorship means that when one of the joint tenants die, the decedent’s interest in the property is gone. The survivors retain an undivided interest in the property free from the deceased party’s former interest. A joint tenant cannot transfer his or her interest in the property by Will.

Example:

Alan, Bob, and Carl own an investment property as joint tenants, each owning a 1/3 interest in the property. Subsequently Carl dies. In Carl’s Will he purported to give his interest in the investment property to his wife Donna. At Carl’s death, Alan and Bob each immediately own an undivided ½ interest in the investment property. Even though Carl may have thought he was leaving his interest in the property to his wife, Donna has no interest in the property.

Tenants in the Entirety

This is an estate in land created in a Husband and Wife. It is similar to joint tenants because it has the right of survivorship. The distinction is that a tenancy by the entirety can only be terminated by death, divorce, mutual agreement, or execution by a joint creditor. Unlike a joint tenancy, a tenancy by the entirety is not destroyed by one party unilaterally conveying his or her interest to a third party.

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