What are the different types of deeds, what covenants does each type include, and when is each type of deed used in real estate transactions?
General warranty deeds include covenants of seisen, quiet enjoyment, and warranty against encumbrances, protecting the buyer against all title defects. Special warranty deeds warrant only against defects created during the grantor's ownership. Quitclaim deeds convey only the grantor's interest without any warranties. Grant deeds are common in California. Each type is used in different situations based on the grantor's knowledge of title and the buyer's protection needs.
Key Takeaways
- General warranty deeds include covenants of seisen.
- Special warranty deeds warrant only against defects created during the grantor's ownership.
- Quitclaim deeds convey only the grantor's interest without any warranties.
- Grant deeds are common in California.
- Each type is used in different situations based on the grantor's knowledge of title and the buyer's protection needs.
Transfer of Property on the Real Estate Exam
Exam questions frequently test the covenants included in each deed type and the differences in buyer protection. You must understand which deed offers the most protection and when each type is appropriate. This knowledge is essential for protecting clients and for advising buyers on the risks of accepting a deed without proper warranties.
Understanding Transfer of Property: Key Concepts
What It Means
A deed is the legal instrument that transfers title from the grantor (seller) to the grantee (buyer). The type of deed determines what warranties the grantor makes about the title. Warranties are covenants or promises made by the grantor about the state of the title. If the grantor breaches a warranty, the buyer can sue to recover losses. Understanding deed types is critical because the type of deed determines what recourse the buyer has if title problems arise.
A general warranty deed includes the strongest warranties available to a buyer. The grantor warrants that the title is free and clear of all encumbrances and defects, both from the grantor's period of ownership and from all prior periods. The grantor also warrants that the buyer will enjoy quiet and peaceful possession without interference. General warranty deeds typically include three main covenants: seisin (the grantor has the legal right to convey the property), quiet enjoyment (the buyer will not be disturbed in possession), and warranty against encumbrances (there are no mortgages, liens, easements, or restrictions on the property). These covenants run with the title; they protect not just the original buyer but also subsequent owners.
A special warranty deed provides limited warranties. The grantor warrants against title defects created during the grantor's period of ownership only. The grantor does not warrant against defects that existed before the grantor took title. Special warranty deeds are often used when a grantor is acting as a fiduciary (like an executor of an estate) or when the grantor acquired the property subject to certain encumbrances. A special warranty deed provides less protection to the buyer because the buyer has no recourse against the grantor if a pre-existing title defect surfaces.
A quitclaim deed conveys the grantor's interest in the property but includes no warranties whatsoever. The grantor simply transfers whatever right or claim the grantor has, if any. The buyer has no recourse against the grantor if the grantor had no valid title or if title defects exist. Quitclaim deeds are used in situations where the grantor's interest is unclear, such as when clearing up a spouse's interest in community property, removing a cloud on title from an old document, or conveying property between family members as a gift. Quitclaim deeds are common in California.
A grant deed is a California-specific deed type that falls between a warranty deed and a quitclaim deed. A grant deed includes an implied warranty that the grantor has not already conveyed the property to anyone else and that the property is free of any encumbrances created by the grantor. It does not warrant against pre-existing encumbrances or defects from prior owners. Grant deeds are the most common residential deed type in California and provide a middle level of protection. Understanding these distinctions is essential because California buyers are often expected to accept grant deeds, which provide less protection than general warranty deeds.
Transfer of Property Rules by State
Each state has its own rules when it comes to transfer of property. Here are a few examples of how requirements differ:
California
California heavily uses grant deeds in residential sales. A grant deed implies that the grantor has not previously conveyed the property and that the property is free of encumbrances created by the grantor. Grant deeds are generally accepted in California residential transactions, though general warranty deeds are available and provide greater protection. Quitclaim deeds are also common in California for clearing title issues.
Texas
Texas predominantly uses general warranty deeds in residential sales. A general warranty deed includes full warranties regarding title and encumbrances. Texas buyers typically expect and receive general warranty deeds. Special warranty deeds and quitclaim deeds are used in specialized situations. The Texas exam emphasizes understanding warranty deeds and the vendor's lien.
Florida
Florida requires warranty deeds (either general or special warranty deeds) for most residential sales. Quitclaim deeds are used for specific purposes like clearing title defects or conveying marital property. General warranty deeds are standard in Florida residential transactions and are expected by title insurance companies and lenders. Title insurance companies issue policies based on the warranty deeds they receive.
The exam tests whether you understand the key covenants in each deed type. A general warranty deed includes covenants that protect the buyer against all title defects; a special warranty deed protects only against defects created by the current grantor; a quitclaim deed provides no protection. Watch for questions asking what recourse a buyer has after closing if a title defect is discovered. If the buyer received a quitclaim deed, the buyer's only recourse is usually title insurance (if it was issued), not a claim against the grantor. Pay attention to state-specific practices: California's grant deeds, Texas's general warranty deeds, and Florida's standard for warranty deeds.
Rules vary across all 50 states
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