Posted by on January 17, 2017

Owning real estate for yourself or as an investment is a goal most Americans hold. Part of real estate ownership in Colorado invovles the use of deeds. Recording a real estate deed is an important part of the real estate transaction. It is a legal instrument that conveys ownership or interest in real property from one person or entity to another. There are several types of deeds that serve different purposes. The type of deed(s) you need will be determined by a variety of factors such as, will the property be mortgaged, or will someone else be taking an interest as well, such as a spouse, business partner, or relative. Each state has different requirements for the preparation and filing of deeds.

6 Types of Deeds

Generic deed forms can be downloaded from the Internet, or purchased in business stores, but this is one area where it is critical to get things right to avoid problems later on. There are six common types of deeds. Below is a brief description of each type. Significant problems can arise if a deed is executed poorly, or if property owners are not aware of what their deed(s) actually says. Besides deed forms, there are numerous other forms needed related to buying or selling real estate.

Quitclaim Deeds

A Quitclaim Deed is a deed in which the grantor warrants or guarantees nothing regarding the status of the title. Moreover, a Quitclaim Deed conveys whatever interest the grantor has in the  property–if any at all. A Quitclaim Deed will not transfer any after aquired title. A Quitclaim Deed may be executed simply to acknowledge that a person who MAY have an interest which is being relinquishing to someone else. Please Note: A Quitclaim Deed conveys any interest in the property subject to any and all prior claims or encumbrances.

General Warranty Deed

A General Warranty is a deed that guarantees the title to the real property against any defects existing before and during the time the grantor (the person transferring the real property to another person; i.e. the buyer or grantee). A Warranty Deed is used in most real estate transactions. As the name implies, this deed comes with a warranty. Specifically, a warranty deed guarantees that the grantor has the right to sell or transfer the property, and that the property is unencumbered with liens or other liabilities, or that any such encumbrances are specifically identified in the transfer documents. Moreover, it warrants that the seller/grantor will defend the buyer/grantee from any third-party challenges of ownership or rights if in the unlikely event a claim is made on he subject property. It is essentially a guarantee that the property interest being transferred is marketable and the title is “free and clear”.

Special or Limited Warranty Deeds

The grantor/seller only warrants and guarantees title only against defects arising during the time that the grantor/seller owned the real property. While not as extensive as a Warranty Deed, it still offers the grantee/buyer some protection.

Bargain and Sale Deed

A bargain and sale deed conveys real property as well as any after acquired title thereto, but contains no guarantees or warranties of title. These deeds are most commonly used by Personal Representatives, Trustees, or Guardians. Bargain and Sale Deeds usually contain language stating that the grantor has done nothing to harm title.

Confirmation Deed

A Confirmation Deed is a deed that passes title by statute to designated grantees through death or foreclosure which gives evidence of transfer of title in the public records.

Deed of Trust

A Deed of Trust applies when the property is used to secure a loan or other obligation. It transfers title to the property to a trustee, such as a title or mortgage company, who then holds the title until the obligation is paid or satisfied. When the mortgage paid or encumbrance is satisfied the Deed of Trust is released and the title is transferred to the owner who borrowed or otherwise used the property as security. For more detail on any of the above types of deeds check out this link.

Keys for Any Deed

Make Sure Basic Information is Correct

Any deed should be checked and double-checked for ordinary issues, such as a misspelled name or an error in the address of the property. The deed is a document you will rely on if anyone presents a challenge to ownership or transfer of the property.

Description of the property

While the ordinary details are important, just as important are the issues specific to the property the deed will convey. It is critical that the description of the property be accurate, and if there are any doubts or concerns, a survey may be worthwhile (only a licensed Professional Surveyor is allowed to provide, specifically those related to the location of property boundaries). Most any property that involves financing is going to require a survey. Every state has an organization of licensed professional surveyors that may be of assistance in finding a licensed surveyor.

In the end, a good deed is one which is accurate, and reflects the intentions of the buyer, but the buyer is responsible to know everything that is written in to that deed. Details that seem small on the front end can turn out to be a big deal at some later date, if the buyer isn’t aware of everything and what it means. For example, MANY deeds for mortgaged property contain a “due on sale” clause, which means that if the property is sold, the entire mortgage become due immediately. Please note: A property owner who is not aware of a due on sale clause can wake up to a real problem and trigger a financial crisis.

Good deeds are written carefully, and after some consideration. Good deed HOLDERS are folks who pay attention to the details, and consider the implications of the decisions they make regarding how the deed will be written.

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This information is provided for educational purposes only and cannot be taken as legal advice. Neither I, nor the other attorneys at Evans Case, LLP, nor any person or entity that I or any such firm represents, has agreed to enter into any agreement, or to incur any obligation, nor has any attorney/client relationship been created by e-mail, fax or other electronic means unless specifically and expressly so provided. No attorney/client relationship exists in the absence of an executed engagement letter or fee contract.