Finding the house of your dreams offers up a whole new world of opportunities for you and your family and it is hard to isolate the excitement of buying a home from the fact that you are entering into a legal agreement to transfer ownership and property rights.
Although now is an excellent time to begin learning about deeds, especially if you are currently dealing with a complaint against your property’s title, you should notify your title insurance provider as soon as possible so that they can resolve the claim on your behalf and give you professional assistance.
Definition of a House Warranty Deed
When most property investment is sold, a warranty deed is used to hand over the title from the grantor (seller) to the grantee (purchaser). A detail of the property is frequently included, as well as any known encumbrances such as easements, outstanding liens, or judgments.
The grantor assures that the asset has no unresolved title issues and that they, as the present owner, have the authority to sell to the buyer when employing a warranty deed.
Various Kinds of Deeds
When you first approach the world of real estate, you will notice that it has its own vocabulary, especially where real estate and law collide. It is critical to understand the meaning of each phrase, as well as the other typical forms of deeds used in property deals.
Deed of Universal Warranty
The principle for a sale of the property is a general warranty deed which is commonly utilized in residential transactions. It is usually required by most lenders for homes they bankroll, and it provides customers with the most preventive approach against potential lawsuits on the title.
Warranty Deed with an Exception
A special warranty deed may sound pleasant, but it is a less advantageous transfer of ownership to a potential buyer. It ensures that the property was free of encumbrances while the grantor was in possession of it but makes no claims for events that occurred prior to their acquisition.
Transient owners, such as banks, who have taken over properties through foreclosure, frequently utilize these deeds.
A quitclaim deed is used in situations where the building’s ownership isn’t in question, such as divorce, inheritance, or the change of ownership to an organization or trust.
The quitclaim deed is used by one of the property owners to relinquish a claim they held on the land in order to prevent future financial damages in the event of a divorce, the partner who leaves the matrimonial residence with no long term financial participation must execute a quitclaim deed.
Quitclaim deeds are also typically utilized when relatives transfer ownership to one another because both parties have developed trust and don’t have to worry about potential title concerns.
In Lieu Deed
When debtors miss a payment on their loans, they may surrender the property to the lending institution via a deed in lieu of foreclosure to avoid a foreclosure being recorded on their credit report. Lenders value this sort of transaction since foreclosures are time-consuming and costly due to regulatory fees.
Worst of all, the house may stay idle during the foreclosure proceedings, luring burglars, and intruders, or it may be vandalized by property owners who are aware that they are about to be evicted.
Deed with a Special Purpose
Special purpose deeds are used in judicial proceedings or to permit those operating in an administrative position to transfer property without exposing themselves to legal responsibility. The sole sort of special-purpose deed used in residential properties deals is a deed in lieu.
Finally, the first line of defense against title complaints is to obtain a general warranty deed. Based on this, be aware that purchasers who get a title search and insurance in addition to the property deed don’t have to worry about a third-party lien.