Using a Deed to Transfer Real Estate By Simon Volkov

A deed is required when real property is bought, sold, or traded. The document is used to provide information about the realty from the time of its inception to the current date. A new deed must be recorded through the county recorder's office each time the property is transferred.

The type of deed used will depend on the transaction used and the type of property being transferred. Each state governs the type of deed used, so the parties involved should consult with a real estate lawyer to ensure property transfers abide by state laws.

The four most common real estate deeds include: Warranty Deed, Deed of Trust, Quitclaim, and Deed in Lieu of Foreclosure.

A Warranty Deed is used as a written guarantee that the seller owns the property outright and states the property is unencumbered from a mortgage note, liens and judgments. There are two types of warranty deeds which include: General and Special.

A General Warranty is used to claim the person selling the property owns the real estate; is legally allowed to sell it; and the property title is clear. General warranties cover the property title from the date of origin. The seller can be held financially responsible for costs to clear the title if problems occur after the sale.

A Special Warranty only covers real estate during the time it was owned by the seller. Special Warranty deeds are typically used when transferring commercial properties, foreclosure real estate, probate properties, and real estate transferred to a trust.

A Deed of Trust is essentially the same as a mortgage note. The document records information about loan terms; property description; names of borrowers; and the person or company providing the loan.

The funding source can be a financial institution, private lender, or property owner who has engaged in seller-financing. The entity which provides financing is named on the title as the beneficiary which grants them authority to repossess the property if mortgagors default on the loan.

The Deed of Trust is secured with a promissory note and several other documents such as a Truth in Lending statement. Many borrowers fail to read the entire contract, but it is crucial to examine any deed used to secure real estate. It is best to consult with a lawyer or mortgage provider when uncertain about terms or legalese presented in deeds.

A Quitclaim Deed is used to add or remove a person's name onto real estate titles. This document is often used to add a spouse after marriage, remove a spouse after divorce, and to transfer real estate bequeathed through a last will and testament. Quitclaim is required when transferring ownership interest. This deed has various uses within each state, so it is best to seek legal counsel.

Deed in lieu of foreclosure is used when banks allow borrowers to return property "in lieu" of undergoing the foreclosure process. This deed transfers property interest to the mortgage lender and removes borrowers' names from the title.

Those who accept a deed in lieu must carefully read the fine print. Many banks hold borrowers responsible for deficiency amounts between the loan balance and sale price by issuing court-ordered deficiency judgments. This can be very detrimental to borrowers who owe more than their home is worth.
Always have this type of deed reviewed by a lawyer.