Sponsored by Jacobson Realty and Home Staging Company, Inc.
A home purchase is one of the biggest investments many people will make in their lifetime. Such a transaction comes with a number of unfamiliar terms that may throw you off, particularly real estate deeds. A real estate agent is the expert trained to help you navigate the jargon and help you seal the deal on your purchase. Today we will help you understand what types of deeds are out there and what each one means for you as a buyer.
There are four basic types of real estate deeds. The general warranty deed, special warranty deed, bargain and sale deed and the quitclaim deed.
General warranty deed
In a nutshell, a general warranty deed is the best protection of title for a real estate buyer. The home seller in the transaction, also known as the grantor of the deed, conveys the property with certain warranties, also known as covenants.
Some basic warranties covered by a general warranty deed are:
Covenant of seisin – Guarantees that the sellers are legal owners of the property.
Covenant of right to convey – Guarantees that the seller has not transferred the property to anyone else and they have the legal right to convey (or sell) the property.
Covenant of further assurance – Guarantees that the seller will deliver any instruments or documents necessary to make the title good.
Covenant of quiet enjoyment – Guarantees that no third parties can establish title to the property.
Covenant against encumbrances – Guarantees that the property does not have any liens or other encumbrances on the title (unless they are stated in the deed).
Covenant of warranty – Guarantees that the buyer is protected if someone else claims to have a superior title.
Special warranty deed
A special warranty deed may sound better, but the word ‘special’ has a different meaning here than we are used to hearing. It actually provides less protection for the buyer than a general warranty deed.
This type of deed usually makes the same covenants that are listed above, but for only a certain period of time. The covenants are only made for the time the seller has owned the property. The general warranty deed makes those covenants for the entire history of the property title.
Special warranty deeds are typically used in commercial property sales, while most residential property sales will use a general warranty deed.
Bargain and sale deed
A bargain and sale deed only implies the grantor holds the title to the property. Beyond that, it provides no protection for the buyer.
These deeds are only used in very specialized cases, like in tax sales and foreclosure auctions. Because this type of deed does not warrant a good title from the grantor, if a title defect comes up later, the new owner is responsible for handling it.
This type of deed offers no protection for the buyer and is used only in very limited transactions.
In this type of deed, the grantor quits any rights to claim the property as his or her own. The property is transferred to the grantee, but there is no covenant of title.
There can be some serious and potentially costly legal repercussions if title defects arise after the transaction, especially when using a quitclaim or bargain and sale deed. The good news is you don’t have to navigate this process alone.
If you need assistance buying or selling a home in Gainesville, Haymarket or Bristow, Belinda Jacobson-Loehle of Jacobson Realty and Home Staging can help. Visit her website at jacobsonrealty1.com/ or call her at 703-753-0125.