A deed is a type of legal document that transfers land from one owner to another. Certain types of deeds are warranty deeds, and they make guarantees that there aren't any hidden owners or other arrangements that could complicate the transfer. A deed that doesn't make such a guarantee is called a non-warranty deed.
A non-warranty deed is a deed that doesn't make guarantees about the property's ownership history. There are several types of non-warranty deeds.
Understanding Deeds and Land Title
A deed is a legal document that conveys ownership rights to real estate. In the United States, they're public documents and are filed with a local office, usually run by your city, town or county. Anyone can ask to inspect a particular deed or the records associated with a particular piece of property, and many jurisdictions now make them available online as well.
Deeds generally describe the piece of property involved and identify who is transferring what rights to whom. Different types of deeds can transfer different rights, so some may only transfer one person's ownership in the land while others retain their stake, and some may have special restrictions, or covenants, limiting the use of the land or requiring the new owner join a homeowners association. Some states require particular types of deeds to take particular forms or use certain language.
As with other legal documents, it's often a good idea to have a lawyer who understands the law and customs in your jurisdiction review deeds affecting your property.
Warranty Deed Vs. Deed
A warranty deed includes a legal guarantee that the person transferring property has spelled out all the rights to the property and that there are no other hidden owners or restrictions on the property, such as mineral rights agreements allowing valuables to be extracted from the land or easements granting others limited use of the property. The person selling land with a warranty deed can be held legally liable if a title problem pops up later on.
Not every deed is a warranty deed. Some deeds, called quitclaim deeds, expressly don't include a warranty and only transfer one person's ownership in the land to a new owner. They're often used to transfer land simply between relatives and spouses. For other purposes, use caution with a quitclaim deed, since you may be buying fewer rights to a property than you anticipate.
Another type of deed, called a bargain and sale deed, also only conveys the rights the original owner has. In some cases, it may make guarantees that the owner isn't hiding any restrictions on the lands that were introduced while he or she owned it, but it doesn't make the broad guarantees of a general warranty deed.
A warranty deed doesn't offer any kind of warranty as to the actual condition of the land or the buildings and other goods on it. It's unrelated to a home warranty or any kind of warranty on equipment and materials, like appliances in a home or the roof on it, that might exist.
Land Title and Title Insurance
Often when you are buying a house or other property, you will take out what is called title insurance. This insures you against any issues with the land title that might pop up later. It's sometimes required by mortgage lenders as a condition for getting a loan, since the lender wants to ensure that if it needs to foreclose on the house, it will actually be able to do so.
Title insurance companies will usually research the history of the land's ownership using public records before issuing a policy. They and their research companies are equipped and trained to access and analyze these records quickly.
Title insurance and homeowner's insurance are distinct, so title insurance doesn't cover catastrophes like fire or burglaries and homeowner's insurance doesn't cover title issues.
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