A deed is a legal instrument used to transfer title to real estate from one owner to another. While a real estate contract may set forth the terms of the transaction, the new owner does not hold title to the property until he or she has accepted a proper deed.

Deed Requirements

While specific deed requirements vary between states, a typical deed must contain the following:

  • A detailed description of the property to be transferred.
  • The name of the party to whom the property will be transferred (the "transferee").
  • The signature of the transferring party, signed in the presence of a notary.

To become effective, the deed must be delivered to and accepted by the transferee. In most states, the transferee may decide whether or not to record the deed with the local land records office. While recording a deed has no effect on the deed's validity, recordation benefits the transferee by formally establishing ownership of the property and providing subsequent purchasers with notice of the transaction.

Types of Real Estate Deeds

There are several different types of real estate deeds, including general warranty deeds, limited warranty deeds and quitclaim deeds. Land contracts typically set forth the type of deed used to convey the property. The difference between deeds lies in the degree to which a seller guarantees the property's title.

  • General Warranty Deeds. General warranty deeds are the most common type of non-commercial real estate deed. A seller conveying a general warranty deed makes certain promises (known as covenants) to the buyer regarding the property's title. A seller typically guarantees that the property is unencumbered by any easements or servitudes not previously mentioned, and that no other person has a legal right to claim the property. If the buyer later discovers an undisclosed encumbrance, or is forced to defend the property's title, the buyer may sue the seller. A buyer may pursue a claim against a seller regardless of how many years have passed since the transaction.
  • Limited Warranty Deeds. Limited warranty deeds, also known as special warranty deeds, are typically used in commercial real estate transactions. While a general warranty deed guarantees against all encumbrances and claims to title, a limited warranty deed protects only against claims made after the seller obtained title to the property. A limited warranty deed therefore makes no guarantees about anything that occurred before the seller owned the property.
  • Quitclaim Deeds. A party offering a quitclaim deed transfers all interest he or she has in a property and makes no warranties of title. If the buyer has a problem with the property's title in the future, the buyer can make no claims against the seller.

Trust Deeds

A trust deed, also known as a deed of trust, may be distinguished from deeds used to transfer real estate. A trust deed is similar to a mortgage. The trust deed transfers a property's title to a trustee (typically a title or trust company) who holds the deed as security for a loan. Title is transferred back to the borrower when the loan is paid off. If the borrower defaults on the loan, the trustee may sell the property and pay off the lender.