What Are Property Deeds?
A property deed is a legal document that identifies the property owner. Every county or township has an office that maintains property records. These recorded documents make up a chain of title for each property located within the county or town's limits. For each property, a deed establishes a person's legal right to the ownership of real property.
A deed can also transfer property ownership rights in real estate. Every time a real estate transaction results in a new owner, a new deed is recorded in the chain of title. The same general principles regarding deeds apply to both residential and commercial properties.
This section addresses frequently asked questions (FAQ) concerning property deeds. If you have related questions, consider visiting our pages on:
- Property taxes determined by an assessor
- Homeowners experiencing foreclosure
- Understanding what property title means
What's in a property deed?
Deeds in their most basic form contain:
- A legal description of the property or real estate involved
- The names of the parties, such as the seller (grantor) and buyer (grantee)
- The signature of the person transferring the real estate
Keep in mind that a property deed is not the same thing as a property title. The deed is the physical document that contains the information above. The title is a concept, the idea of ownership itself. A property deed communicates title by putting it into writing. In other words, title to a property is manifested (established) through the deed.
How do I create a property deed when buying or selling a home?
Most of the time, you won't be the one creating a property deed. The people helping you buy or sell your home will do it for you. That includes the title company, escrow company, bank, and realtor. They'll work together to create all the paperwork that you need to sign. Your job is to verify the information and make sure you understand what you're signing.
A property deed is just a piece of paper. Many real estate companies have templates you can fill out to make the process easier. For example, if you're selling, a title company might give you a pre-filled document that contains your name and the address of your property. It will also state the name of the person who is buying the property from you. If you're a buyer, you don't need to sign the deed. You just need to make sure you're named as the grantee.
How much does a property deed cost when closing?
Your deed costs will depend entirely on where you live, what you're selling, and who you're doing business with. In a real estate transaction, the following parties will be involved in some way to process your deed:
- Title company: They check title to make sure you own what you're selling. They may also insure the title for a buyer or lending bank.
- Escrow company: As a neutral party, they hold onto the purchase funds while waiting for title to be transferred.
- Real estate brokerage: This is the firm your realtor works for.
- Bank: This is often a lender who has loaned money to finance the property.
- Your county or township clerk: Known also as the recorder's office, the clerk puts the deed into public notice.
- Notary public: A notary public must notarize the signature on the deed to verify the signatory's identity.
All of these parties set their own rates for the services they provide. There is a separate recording fee the county recorder charges you for recording a real estate purchase. All in all, the fees to create and record a property deed can come out to several hundred dollars.
What can cause a property deed dispute?
Property deed disputes can arise in all sorts of ways. Some common scenarios include:
- Lost deeds, including deeds that were never recorded
- Clouded title, such as encumbrances on the title
- Mistakes on deeds (wrong names, addresses, or missing signatures)
- Ownership disputes between family members, such as beneficiaries under a will or trust
For example, a swindler may find a property owned by an ill, elderly, or other vulnerable person, and hold themselves out as the true owner in order to defraud a potential buyer. The swindler might even create a deed and sign it, purporting to transfer title to a new buyer. Here, the fraudulent activities of the swindler will cause a property deed dispute between the true owner and the buyer who was defrauded.
What are the basic types of deeds?
Different types of deeds can achieve different kinds of goals. For example, if a lender is forced to sell a property in foreclosure, a sheriff's deed allows the foreclosed property to be transferred to a new owner. Here are the most common types of property deeds and how they are typically used:
- Grant deed: A grant deed transfers ownership interest and traditionally promises that the property hasn't already been transferred to someone else.
- Quitclaim deed: A quitclaim deed transfers whatever ownership rights that the transferring party may have on the property. Quitclaim deeds are useful for transferring rights when it's unclear what those rights are.
- General warranty deed: A warranty deed transfers ownership and provides additional promises, including that the transferring party has good title and the property is free of any encumbrances like liens and easements. If the promises made turn out to be untrue, the transferring party (the grantee) agrees to compensate the buyer.
- Special warranty deed: Special warranty deeds are more limited in what they cover. The seller only warrants (promises) that the property is free from title problems or encumbrances during their ownership period. Unlike the general warranty deed where the promise covers the property's entire history, here the promise is only limited to the time the owner held title to the property.
I'm buying real estate jointly with someone. Are there different ways to do this?
There are generally three ways to take property jointly with someone (buy property together), and the effect of the choice can be significant. In whichever form of deed you use, you should specify how the property is being taken. Here are the three most common:
- Tenants in common: If you take property as tenants in common, you can take unequal shares of the property and define who your property goes to when you die.
- Joint tenants: If you take property as joint tenants, you must take the property in equal shares, and your share will automatically pass to the other co-owners upon your death. Because the share automatically passes, you do not need to state who gets the property in your will.
- Tenants by the entirety: Tenants by the entirety is also referred to as community property. Tenants by the entirety is a form of spousal property, where married people own the whole property. As married family members, they cannot transfer their rights to the whole property without the consent of the other tenant. The language for this varies by state. In some states, a property deed will state that the married owners are joint tenants with rights of survivorship.
Do property deeds need to be notarized, filed, and witnessed?
Almost all states require that a deed be notarized and filed, and some states require that it also be witnessed. Thus, the transferring party should go to a notary, who will notarize and witness the signature. If you fail to record your deed, the legal consequences will depend on whether your state is a:
In other words, failing to file your deed might affect your rights as a buyer or a seller depending on who had notice, who filed a different deed first, or both.
Do I need to record the deed?
It's crucial that the transferring party record the deed by filing it with the land records (county clerk's) office in the county where the property is located. This can be called a country recorder, land registry, or register of deeds. The recorder's office will keep a certified copy and return the original to the transferring party.
Since the deed is going to be a public record, anyone performing a title search will be able to know you have ownership of the property. For example, a title company conducting due diligence on ownership records will be able to pull up your name. The main purpose of recording the deed is to give notice to the world that you have title to the property.
What are trust deeds and contracts for deeds?
There are two common deeds that aren't really deeds in the traditional sense. This is because they don't transfer property:
- Trust deed: A trust deed (or deed of trust) is a mortgage that transfers title to land to a trustee who holds the land as security for a loan. When the loan is paid off, the title is transferred back to the borrower. Some states used trust deeds to allow lending banks to hold a security interest against real estate.
- Contract for deed: A contract for deed is a contract that grants one party title to the property until the other party pays off their loans, upon which title is transferred back to the original borrower.
Confused About Property Deeds? Get Peace of Mind With an Attorney
Real property is often the largest investment in a person's life. This means that documents establishing ownership should be very carefully constructed by a professional. Contact a local real estate attorney to learn how they can help protect your interests now and far into the future. They can provide you with valuable legal advice regarding statewide laws that affect your property deed.
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