Property Deeds are the documents used to transfer real estate from a seller (grantor) to a buyer (grantee). In Delaware, the property deed is drawn up by an attorney and includes the actual transfer of the property, (the granting clause), a description of the property (habendum clause) and the warranty. Once prepared, deeds must be signed by the grantor. Different types of deeds provide different assurances to the grantor and grantee, defined by each individual situation and warranty if included.
In years past, all you had to do to sell your house was give the buyer a handful of dirt from the property and say a few legal words in front of witnesses. Can you imagine this taking place today to symbolize the transfer of property? How times have changed! Nowadays in order to complete a real estate transaction we seem to need an entire tree’s-worth of paper, nerves of steel, an attorney, and of course the property deed.
Here are the types of property Deeds issued today:
General warranty deed: Guarantees that the grantor is the owner of the property and has the right to sell it to the grantee. Guarantees that there are no debts on the property or defects in structures other than those recorded in the deed. Guarantees that the grantor will reimburse the grantee for any loss sustained should unforeseen problems arise with the title, even problems that arose before the grantor took ownership.
Special warranty deed: Similar to the general warranty deed. Also includes the warranty that the grantor has the legal right to sell the property. Differs in that it only guarantees that there are no debts on the property or defects in structures other than those stated during the period of the grantor’s ownership. This kind of deed makes no guarantees outside of what the grantor had knowledge of or caused throughout ownership of the property. For example, if the grantor sells a house in which the plumbing was functioning correctly while he owned it, but then it breaks after the sale as a result of a prior defect, the grantor cannot be held responsible. Other warranties can also be included if so stated in the deed.
Grant deed: This is the most common type of deed used to transfer property in the U.S. This deed implies that the grantor has the right to sell the property, and that the property itself is unencumbered. However, it does not make explicit warranties as the above deeds do.
Quitclaim deed: This kind of deed is usually used in divorce cases where one party releases any claim to the property. Since the purpose of a deed of this type is for one party to release any interest that they had in a piece of property, there are no warranties included. The deed doesn’t warrant that the grantor had any legal right to the property at all. This prevents the releasing party from claiming a right to money from the sale of the property somewhere down the road.
Deed-in-lieu of foreclosure: When a homeowner misses several payments and defaults on a loan, it is possible to transfer the deed of the house to the lender in order to avoid foreclosure. This can use any of the above deed types in the transfer. Since the homeowner already owes money to the lender, there is no transfer of money. The lender sells the house to recover at least part of what the homeowner owes and then provides the borrower with documentation that the debt is cancelled and that the lender cannot later ask for what remains of the debt after the property has been sold.