If you’re in the market for a new home or commercial property, you’re probably not thinking about what kind of deed comes with it. In fact, many people interchange the terms “deed” and “title” even though they’re two very different things.
A title refers to who owns a property. One of the last things you’ll do when the sale is complete is “take title” to the property. A deed is an actual document that codifies ownership. There’s more than one type of deed that can be transferred during a real estate transaction.
General warranty
This is the most common. If you’re getting a mortgage, your lender will likely require that it have a general warranty deed. A general warranty deed guarantees that the property has no liens, or claims, on any part of it by another party and that the owner has the right to sell it. With a general warranty deed, if a lien on the property is later discovered, the party who sold the property is responsible for clearing it.
Special warranty
This type of deed guarantees that a property has no liens on it currently. It doesn’t, however, guarantee that there haven’t been liens on it under prior owners that you could end up being responsible for. These are more common with commercial properties than residential ones. However, if you’re looking at foreclosure properties or any properties currently owned by a financial institution, you’re likely to find that they typically come with special warranty deeds.
Why research is critical before you buy
It’s important to know what kind of deed comes with any property you’re considering purchasing. If it’s anything other than a general warranty deed (and there are multiple types of deeds), it’s wise to have a thorough title search done. This should bring up any past liens on the property and whether or not they’ve been resolved.
Your real estate agent should be able to help you make sure that you’re not going to face any unwanted surprises as you take title to a new home. However, it’s always wise to have legal guidance as well – especially if a property has a long and potentially complicated history. This can save you time, expense and stress later on.