Deed Types – What Are The Differences?

Signing a Deed

What is a Deed?

Signing a DeedA deed is a legal instrument used to grant a right. The deed is best known as the method of transferring title to real estate from one person to another, often using a description of its “metes and bounds, by lot, block and subdivision, or by parcel/lot and short plat.” However, by the general definition, power of attorneys, commissions, patents and even diplomas conferring academic degrees are also deeds.

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For an Instrument to be a Valid Deed:

  • Deeds must be in writing. Under the Statute of Frauds, interests in real property must be conveyed by written deed.
  • Deeds must evidence consideration. The consideration may be nominal, conveyed as a “gift”, for “love and affection”, or for “$1.00 and other good valuable consideration”.
  • Deeds must contain a legal description, which identifies the real property being conveyed.
  • Deeds must be signed by the grantor (old owner) and the title officer and escrow closer must confirm the grantor’s identity and authority.
  • Deeds must be acknowledged “by the party [signing the deed]…before some person authorized by [the Real Property Conveyance Act]… to take acknowledgments of deeds”.
  • Deeds must be delivered. Delivery occurs when the grantor parts with physical control over the deed with intent “that the deed should presently pass title.”

Deed Conditions

Conditions attached to the acceptance of a deed are known as conditions. In the transfer of real estate, a deed conveys ownership from the old owner (the grantor) to the new owner (the grantee), and can include various warranties. The precise name of these warranties differ by jurisdictions. However the basic difference between them is the degree to which the grantor warrants the title.

Types of Deeds

Types and examples of Real Estate Deeds
Types of Deeds
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Special Warranty Deed This warranty may be limited only to claims which occur after the grantor obtained the real estate.
Warranty Deed The grantor (grantor name) for and in consideration of (insert consideration) in hand paid, conveys and warrants to (grantee name) the following described real estate (insert description), situated in the county of , state of Washington. Dated this — — day of — —, 20___.
Bargain and Sale Deed The grantor (grantor name), for and in consideration of (insert consideration) in hand paid, bargains, sells and conveys to (grantee name) the following described real estate (insert description) situated in the county of __ , state of Washington. Dated this — day of , 20___.
Quitclaim Deed The grantor (grantor name) for and in consideration of (insert consideration) conveys and quitclaims to (grantee’s name) all interest in the following described real estate (legal description), situated in the county of , state of Washington. Dated this — — day of _, 20__.
Deed of Trust Used as an equivalent to a mortgage. A trust deed isn’t like the other types of deeds; it’s not used to transfer property directly. It is commonly used in some states (Washington, for example) to transfer title to land to a “trustee,” usually a trust or title company, which holds the title as security (“ in escrow”) for a loan.
Grant Deed Used for the transfer of property from one person to another person. Each party is required to sign it. Then the document must be notarized, or marked accordingly to show that it was signed before a Notary public. The reason the document must be notarized is that these transactions are frequently forged.
Sheriff’s Deed A deed issued to the buyer of property (grantee) that was sold under court order to pay off a debt.
Tax Deed Sale The forced sale, conducted by a governmental agency, of real estate for nonpayment of taxes. It is one of two methodologies used by governmental agencies to collect delinquent taxes owed on real estate, the other being the tax lien sale. Real estate taxes are considered delinquent if not paid within a specified period of time. If the taxes are not paid, after notice is given to the property owner (as well as others holding an interest in the property, such as a mortgage company), the property is sold at public auction to the highest bidder.

Betrayed with an Uninsured Deed…

Beware of uninsured deeds.An escrow officer in one of our sister operations opened a purchase transaction for $347,000. She ordered the title report and the order was assigned to Casandra, a commercial title officer. Casandra issued the report reflecting two owners of record: Maysa Alhelow, a single woman and Thomas Paul Helo, a married man as his sole and separate property.

The escrow officer processed the order and once she received all signed documents and monies, shipped the documents for recording. It is normal and customary in California, where the property is located, to record prior to disbursing the escrowed funds. The escrow officer was waiting for recording confirmation.

Uninsured Deeds

Uninsured deeds in the chain of title always pose a whole new level of risk for a title insurance company. Title officers are taught to scrutinize those types of deeds for obvious signs of forgery or other misconduct on the part of the grantors and grantees. The title officer in this particular order did just that and ultimately halted a transaction that would have inevitably caused a title claim.

When the recording package arrived Casandra noticed only Alhelow signed the deed to the new buyer, and not the co–owner Thomas Paul Helo. Casandra called the escrow officer and asked why there was no deed from Thomas. The escrow officer explained that she was told the owners had recently recorded a deed, wherein Thomas conveyed his interest in the property to Alhelow.

Casandra located the recorded deed from Thomas to Alhelow.
She inspected the deed and noticed the following:

  • Deed was uninsured
  • Deed was not notarized by a Company–approved notary
  • The signature of Thomas Paul Helo appeared to be VERY different than his signature on other recorded documents

A New Deed was Needed

As a result, Casandra called the escrow officer and insisted Thomas sign a new deed in the presence of an employee or Company–approved notary. The escrow officer called the number she had for Thomas, but Alhelow answered the phone. The escrow officer explained the need for a new deed from Thomas. Alhelow responded Thomas could not possibly come into the office to sign the new deed as he was in Los Angeles and would not be returning anytime soon. The escrow officer informed her it was not a problem as Thomas could sign at one of our Los Angeles offices. Alhelow said she would contact Thomas.

In the meantime, the escrow officer did some research, found a Los Angeles number for Thomas and contacted him directly. When she explained the need for him to sign a new deed, Thomas confirmed he did not sign the first deed conveying his interest to Alhelow, and he had no knowledge the property was even being sold!

“…and he had no knowledge the property was even being sold!”

The escrow officer asked Thomas if he was even interested in selling the property and he stated, “No.” The escrow officer immediately resigned from the transaction, knowing full–well Thomas was not going to agree to the sale.

A Forgery Indeed

It was later discovered that Thomas’ brother, Kahir Tim Helo, had actually forged Thomas’ signature on the deed. And the escrow officer and Casandra discovered Kahir is Alhelow’s boyfriend! Ruth C. Escobar, who notarized the forged deed, works for a tax preparation office in Bakersfield. It is unclear as to what identification Kahir provided the notary.

Casandra’s keen observation of the uninsured deed disclosed a forgery and prevented a future claim from the real Thomas Paul Helo.

Our Title Insurance Policies Insure Against Forgery

Thomas’ brother and his brother’s girlfriend were attempting to sell the property without Thomas knowing, so they would not have to split the proceeds with him. Our title insurance policies insure 100% against forgery. Had Our Company closed and insured the transaction, and later Thomas Paul Helo made a claim to his interest in the property, we would have had to defend our policy holder – the buyer. As the insurer, we would have had to settle with Thomas in order to obtain a valid deed and cure the title defect for the new owner of the property.

Thoughts or questions? Please share below!

The Probate Path – Single at Death

Recent blogs have discussed probate issues, or problems associated with a “lack of probate.” If a home is to be sold but the record owner is deceased it is imperative to identify who now owns the property. The transaction can then close if the proper parties execute a deed to the buyer.

We are not talking here about joint tenancy or trust property, but rather where title was vested simply in an individual.

There are three basic situations when the owner has died:

Probate Paths - Single at Death

Click the image above to view a printable version of the chart.

  • First, the owner was single – not married or a domestic partner.
  • Second, the owner was married or a domestic partner, but it was separate property (not community property).
  • Third, the owner was married or a domestic partner and it was community property.

Of course, each of these has additional variations, mostly relating to whether the deceased had a will, and whether or not the estate (with or without a will) is being probated. If there is a probated will, devisees (those named in a will) will get the property or the proceeds from the sale if it’s sold before the probate is closed. If there is no will, then state law provides who inherits. It can get complicated to work it all out.

It may be helpful in such cases to see a chart following the path to a successful closing. In this and future blogs we will show basic diagrams applicable to each situation. This month we start a fairly simple one – a deceased owner who was single at the time of death.

Deceased Owner – Single at Death

Sam Smith, a widower, just died. The home is listed by Rolf, who tells the Realtor® that he is Sam’s nephew and only heir. The title company gets the order and finds the death certificate, but doesn’t find a probate case. Having no other information at this time, the title company vests title in “the heirs and/or devisees” of Sam, and asks Rolf for a “lack of probate” affidavit. This affidavit is designed to identify relevant facts to allow the title company to assess its risk, including whether or not there is a will or a probate (which could be any county in Washington or in another state), the size of the estate (to determine if estate taxes apply) and other valuable information. The goal is to find out who can actually convey the land (and for escrow, who will get the proceeds of the sale), so that the risk is at least minimized, if not eliminated, that an unknown heir will come forward after the title has been insured.

No Heirs?

At some point, if there are no heirs at all, the home would eventually escheat to the State of Washington. In such cases, a probate may be opened, but here there are no easy answers. Usually creditors will open a probate and attempt to sell the property, with excess proceeds going to the state after the sale of the home.

Rolf completes the affidavit, and says that Sam never had children, and that his parents are also deceased. Sam did have a sister, but she is also died. She did, however, have an only son – Rolf who in turn is Sam’s nephew.

The laws of descent (RCW 11.04.015) provide that inheritance would be in the following order:

  1. Spouse, if any, or if none, then
  2. Children if any, or if none, then
  3. Parents, if alive, or if not, then
  4. Siblings, and if none survive him, then
  5. Grandparents, or if none, then
  6. Children or grandchildren of the grandparents and on down the line.

So, it would appear that the nephew is the sole inheritor and can sell the house. Now, it’s only the word of the nephew on the affidavit, but it is sworn under oath. It’s a judgment call on the part of the title company to decide the veracity of the nephew – is there a hidden will? Other heirs he’s just not mentioning? It is a risk, but the sworn affidavit is something for the title company to go on.

The chart below gives a simple guide to follow with these facts. There are four “paths” to follow. The first doesn’t apply, because although there is no will, neither is there a probate. The second doesn’t apply since there is neither a will nor a probate. The third doesn’t apply, because there is no will. So, we are left with the fourth path – no will and no probate. It requires the lack of probate affidavit, and a deed only from Rolf (as the sole surviving heir of Sam Smith, deceased), the child of a sibling, because Sam left no living kids, grandkids, parents, brothers or sisters.

Probate Paths - Single at Death

Click the image above to view a printable version of the chart.

Questions or comments?  Please share below!

Deeds Indeed

Deeds Indeed

Signing the deed

Consider this… A bank is selling REO property, but will convey by “special” warranty deed, rather than the statutory warranty deed we usually see. Isn’t it still a warranty deed? Will the purchaser accept this? And, isn’t a statutory warranty deed required?

Types of Property Deeds

There are several types of deeds. A warranty” deed warrants title for all matters, no matter what they are or when they were created prior to the date of sale. It binds the seller for the benefit of the buyer and all heirs and assigns of both. Express warranties aren’t shown in the deed because Washington’s statutes say what they are – hence a “statutory” warranty deed includes them without recitals in the deed. (The warranties are set out in RCW 64.04.030.)

A quitclaim deed means that no covenants of warranty are included at all. The buyer gets only whatever interest the seller has, good, bad or ugly (and may even be nothing). It is often used to clear a cloud on the title. (These deeds are provided for by RCW 64.04.050.)

A bargain and sale” deed falls somewhere in the middle. It also has statutory definitions, and means the seller is limiting covenants of good title to only matters created during the time that the seller was in title or as specified in the deed. (The specifics are in RCW 64.04.040.)

The ability to further limit warranties gives rise to the special” warranty deed. It’s not a statutory form, but simply means the grantor is expressly stating in the deed what the limited warranties, if any, are.

Warranties may be unacceptable to a seller who shouldn’t have to assume that type of liability. Thus, a special warranty deed is used in fiduciary situations, including (in addition to the sale of REO property) a personal representative in a probate, a deed of trust trustee, and a trustee of a trust – all parties who aren’t responsible for matters arising before coming into title or who don’t have any active ownership of the land.

Warranties are valuable to a buyer because if there are problems or defects in the title, it is important to be able to sue the seller, even when the buyer has title insurance. That’s also why title companies like a warranty deed, because they have subrogation rights under the policy, meaning it can step into the shoes of the insured and sue the seller under the deed warranties. The buyer’s title policy still provides the same coverage no matter which type of deed is used.

Only the parties’ respective attorneys can offer advice in this area. The seller and purchaser need to agree on the form of deed. They each have valid legal reasons for their requirements. While it is unlikely that any REO seller will be willing to offer a statutory warranty deed, the form of deed ultimately comes from negotiation.

Do you have a question or comment about deeds?  Please leave a comment below!

How do I remove someone from the title to my property?

How do i remove someone from property title

How Do I Remove Someone From Title?

Situations can arise where the ownership interest in your property changes from the way it was originally acquired. Whether it is due to death, divorce, a parting of ways or the requirements of a new lender it sometimes becomes necessary to remove someone’s name from the title to a property. This is usually accomplished by the party exiting title executing a deed of conveyance in favor of the party or parties that will remain in title. Clearing the interest of deceased parties is an entirely different matter altogether and will not be addressed here.

In Case of Divorce

In cases of divorce, the best way to clearly show which party was awarded the property would be for the party not awarded it to execute a quit claim deed in favor of the party that it was awarded to. Many times the terms of the decree of dissolution and/or settlement agreement in the divorce case don’t properly identify real estate holdings and it can be difficult to determine “who got what”.

Tenants-In-Common

If title is held by two or more parties as tenants–in-common and one of them decides to sell or otherwise relinquish their interest they would execute a deed of conveyance (typically a statutory warranty deed or in some cases a quit claim deed) to the recipient(s) of their interest.

When a Party in Title Doesn’t Qualify For a Loan

Sometimes a party in title does not qualify for a loan and if the lender agrees to make the loan to the other title holder(s) a deed of conveyance (typically a quit claim deed) will be executed by the non-borrower to the borrowing party in title to the property.

Seek Legal Council

You should always consult with an attorney before signing any legal documents. You should also consult with Excise Tax Dept. personnel at the local county recorder’s office to help you determine if excise (i.e. conveyance or transfer) tax will be due when the deed is presented for recording.