Question: I know that real estate is transferred by a deed. However, I recently found out that there a lot of different kinds of deeds. Can you explain?
Answer: Florida statutes provide that most real estate transfers (except short term leases) must be in writing signed in the presence of two (2) signing witnesses. The conveying document must also be acknowledged, which means the signing grantor must state to a notary public that he or she signed the conveyance, after which the notary affixes signature and seal. The statutes also provide that most deficiencies in witness signature or notarization are cured five (5) years after the document is recorded in the public records of the county in which the property is located.
The most common deed to convey real estate is known as a Warranty Deed. A Warranty Deed warrants title and can either list the common law title warranties or use a shorthand form prescribed by statute, which is known as a Statutory Warranty Deed. The warranties in a general or statutory Warranty Deed are:
- Covenant of Seisen. This warrants that the grantor has good title and that if title proves defective the grantee can sue the grantor.
- Covenant of Quiet Enjoyment. This is a guarantee that the title is superior to claims of any other party.
- Right to Convey. This warrants that the grantor has authority to convey title.
- Warranty Against Encumbrances. This guarantees that the only encumbrances or liens are those listed in the deed.
- Covenant of Further Assurances. This requires the grantor do whatever is needed to fix a later discovered title problem.
Most residential sales contracts require the seller to convey good or marketable title by a general or statutory Warranty Deed. That type of deed contains the most guarantees and is the best protection for a buyer. Not all grantors are willing to sign a general Warranty Deed and, in some cases, the purchase and sale agreement provides for a lesser quality deed.
One of these deed forms is a "Special Warranty Deed". Rather than being special, this deed actually limits the grantor's warranties to those specifically listed in the deed. Most of the time these deeds merely warrant that the grantor has done nothing to render title defective during the term of the grantors ownership.
Variations of the Special Warranty Deed include Personal Representative Deeds and Guardian Deeds. Because these conveyances are usually from a legal title holder who is unwilling to assume liability for title defects, the deed warranty is limited.
Conveyance may also be by Quit Claim Deed. A Quit Claim Deed does not warrant title in any fashion. It is most often used to cure problems in a chain of title like failure to obtain joinder of all owners in a prior conveyance or to clarify that a person who has an apparent interest in a property does not claim any such interest. They are also commonly used to transfer property between relatives for no consideration or to transfer property from individual ownership into a revocable living trust. Grantors consider those transactions relatively simple and for no consideration and therefore think it a good idea to avoid warranties of title. That can be a mistake.
Although a Quit Claim Deed and a Warranty Deed both convey title, and the grantee under both is not charged with knowledge of any title problem merely because of the type of deed involved, a Warranty Deed has two extra benefits that are not available when a Quit Claim Deed is used. First, if the grantor did not have good title at time of conveyance and subsequently gets good title, the Warranty Deed acts to magically convey that title to the grantee in the Warranty Deed.
The other benefit of a Warranty Deed is that the grantor, in warranting a title, is to allow you to cure any title defect. While that may not be attractive when the deed is used to cure a title problem and the grantor has no real interest in the transaction, it could be a benefit when the grantor is transferring to a relative or to the grantors trust, as any claim against the grantor under a Warranty Deed will likely be covered by any title insurance policy issued to the grantor. Without those warranties of title, the grantee will be left to cure title alone, without an insurance company to assist, unless the grantee also bought title insurance.
Florida statutes also recognize a Deed of Bargain and Sale. Those deeds are not particularly common and often serve as both contracts to convey and transfer title. The grantor under a Deed of Bargain and Sale usually only warrants that the grantor has not taken action to encumber the property.
The type of deed the grantee gets can make a big difference, especially if a title problem arises. Anything less than a general or statutory Warranty Deed may provide inadequate protection for a buyer. Use of a Quit Claim Deed for "friendly" transfers can backfire when the parties later find that all title insurance protection has been lost. For these reasons, when you are contracting to purchase or are otherwise involved with a conveyance of real property, you should consult with an experienced real estate attorney at the earliest opportunity.