Types of Deeds
A deed is the document that is used to transfer property ownership. There are different types of deeds. Each one conveys title differently. The following are the most common types of deeds in land investing.
Quit Claim-The quit claim deed is used to transfer interest in real estate from one person to another. Unlike other deeds, the quit claim deed conveys only the interest the person has at the time of the deed's execution and does not guarantee that that person actually (legally) owns the property.
A quit claim deed is used mostly in family matters such as divorce proceedings or estate planning purposes. For example, if Uncle Fred passed away any family member who might have a claim on his estate would be asked to sign a quit claim deed in order to sell with a clear title. Again, a quit claim does NOT transfer ownership, only interest. I could sign a quit claim deed for the Golden Gate Bridge for whatever interest I have in it. ( I have NO interest in the Golden Gate Bridge.) Anyone who would buy it would be buying nothing.
Warranty Deed-Warranty Deeds provide the most protection to the buyer. This type of deed guarantees that the seller holds clear title to a piece of real estate and has a right to sell it to the buyer. The guarantee is not limited to the time the seller owned the property. It extends back to the property's earliest title.
A warranty deed is the type of deed you want. It conveys ownership and guarantees that the title has no liens or encumbrances. Sandy Land offers warranty deeds on most of our properties. For very small properties, we offer a special warranty deed.
Special Warranty Deed-A special warranty deed is similar to the warranty deed except that the seller only guarantees clear title for the time he owned the property. A special warranty deed isn't bad. It's just that sometimes it is difficult and cost prohibitive to pay for a title search since the beginning of recorded time in order to have a warranty deed.
A special warranty deed is common when purchasing vacant land because small pieces of land are just not worth the cost of paying someone to go all the way back in recorded time to make sure the title is clear. The cost doesn't justify the benefit received. Special warranty deeds are commonly used on properties with a value less than $1500-$2000.
Happy Land Hunting,