Whether you have a young family and are looking for a great starter home, or you are a business owner seeking adequate space for your headquarters, you’ve recently decided to wade into the sometimes-murky waters of the real estate world. Before you sign a deed and hand over your money, however, it’s important to understand the crucial differences between various types of deeds that you may see in your property-buying journey.
While there are virtually countless types of deeds, here are some of the common ones that you are most likely to see.
General warranty deeds
In addition to transferring title of a home to you, general warranty deeds also provide you with extra protections.
For example, if the seller gives you a general warranty deed, they are guaranteeing that they have legal title to the property, the right to convey it to you, and that the property is free of other encumbrances that they have not disclosed. This gives you a cause of action against the seller if a problem arises surrounding the title.
Special warranty deeds
The next best level of protection you can get is through a special warranty deed. Similarly to a general warranty deed, this type of deed protects you against problems with the title. However, a special warranty deed only covers title problems that began when the seller owned the property. It does not guarantee title before the seller purchased the property.
This type of deed offers the least amount of protection. It transfers to you any rights that the seller has in the property, but does not include any guarantees as to title, liens, easements or any other potential problems. Thus, be careful about accepting a quitclaim deed, and do so only if you are reasonably sure that you will not encounter unpleasant surprises down the road.
Shopping for a new piece of real estate can be a joyful experience, but it can also come with its fair share of stress. Make sure that you understand the type of deed that the property’s seller is offering you, so that you know what to expect in the years to come.