Buying

Understanding Deeds When Selling a Home

What is a deed for a house

Understanding deeds when selling a home is one of the most important aspects of the deal. Deeds are an important legal tool that a lot of folks don’t understand as well as they should. It acts as a record of ownership and the transfer of ownership in regards to certain kinds of property, such as real estate. Improperly recorded deeds can cause far ranging legal complications that could be prevented by taking a little time to understand a deed.

A house deed is proof of property ownership. In most provinces they become public records; usually requiring to be filed and notarized. They document both the current owner, as well as future and past owners of a property, and their signatures.

Some deeds provide legal protections for new owners while others do not. A quitclaim deed provides almost no protections for the new owners of the home. It is mainly a document that states that the current owner is foregoing their interest in the property and transferring it to a new individual. These are used frequently in regards to marriages and divorces. Often times a spouse or relative will use these as well to add a new family member, typically a husband or wife, to a deed. Hence, they provide little legal protection since the point of the deed is to declare one party giving the property up. 

Quitclaim deeds are also used in the case that a title company finds a potential claimant to a property. They will generally ask the potential claimant to sing the quitclaim in order to clear up the title for a proper transfer. 

A warranty deed, which is also know as a vesting deed in some jurisdictions, on the other hand provides more protections for problems that may occur with the tittle and more. There are two types of warranty deeds. The main type is a general warranty deed. General warranty deeds guarantee that the property is free of any debts or liens associated with it. They likewise ensure the buyer that the seller will take responsibility for any legal claims made against the house that date back through it’s entire history. Special warranties are deeds that act in the same way as general warranties, but special warranty deeds only cover claims and problems that pertain only to when the seller occupied it. 

To better illustrate the difference, the general warranty would cover a newly discovered lien placed on the house at a point before the seller lived in it. The special warranty however would not make the seller liable for a lien placed on the property before the seller ever occupied it. 

Another type of property deed is an “bargain and sale” deed. These types of deeds are for more common in the United States than Canada, especially in the state of New Jersey. These deeds generally convey a property to a new owner without a sale nor any liabilities to the former owner. These deeds are used in the case that a property owner wants to pass down some property to a family member or friend. It is also common that these sorts of deeds are used when placing a property into a trust. Foreclosure sales tend to use these types of deeds as well. 

Grant deeds are deeds that assure the buyer or new owner that you won’t turn around and sell the property to another person, as well as that there are no liens or restrictions on the property. These sorts of deeds are used mainly when the purchase is made in cash or is given as a gift to a person or trust. 

How does all of that translate to you selling a home? In general, a normal home sale will most likely use a warranty deed of some sort. On your end as a seller, the main thing you should make sure of is that you don’t have any debts like liens outstanding against the home. This can make the sale of the house much easier. 

The bottom line is that deeds are legal proof of who owns or will own a property, and what rights they are afforded by the deed. Before selling or buying a home, carefully study and examine what a deed means and what it legally affords you. In some cases, it is recommended to contact a real estate attorney for questions regarding your deed or potential purchases. Keep in mind that this article isn’t legal advice and the law is constantly changing. You should always talk with an attorney about any legal questions involving your deed that you might have. 

Rachel Spencer