Question

You are considering purchasing real estate. Describe the provisions of a warranty deed, quit claim deed, and contract for deed. Explain what form is most desirable for a seller and also for a buyer. Give some examples.

Answer 1

A warrant deed (sometimes called a general warranty deed) is a form of deed that provides a full guarantee of title to real estate. This guarantee covers acts taken by all previous owners in the chain of title. A warranty deed transfers property from the current property owner (grantor) to one or more new owners (grantees). By signing the warranty deed, the grantor guarantees the grantee against all title issues, regardless of when they arose. This guarantee is not limited to the time when the grantor owned the property. Even if the title issue was caused by someone who owned the property before the grantor, the grantor is legally responsible.

A general warranty deed provides the grantee with the highest form of protection as it assures the following basic warranties:

• The grantor warrants that they are the rightful owner of the property and have a legal right to transfer the title.
• The grantor warrants that the property is free and clear of all liens and that there are no outstanding claims on the property from any type of creditor using it as collateral.
• There is a guarantee that the title would withstand any third-party claims to ownership of the property.
• The grantor will do whatever is necessary to make good the grantee’s title to the property

Example: Warren conveys property to Dylan by warranty deed. After the conveyance, a neighbor sues Dylan over a boundary issue caused by someone earlier in the chain of title. Warren was not aware of the boundary issue when he signed the warranty deed, and it wasn’t caused by anything that Warren did. Still, Warren is legally responsible to Dylan under the warranty deed. Had Warren used either a quitclaim deed or a special warranty deed, he would not have been legally responsible.

A quitclaim deed (sometimes called a quick claim deed or quit claim deed) is a special deed form that transfers property with no warranty of title.

A quitclaim deed requires special language to ensure that the deed qualifies as a quitclaim deed. This language is automatically included by our Deed Generator.

A quitclaim deed releases a person's interest in a property without stating the nature of the person's interest or rights, and with no warranties of that person’s interest or rights in the property

Example: Quitclaim deeds are often used to remove an ex-spouse from a deed after a divorce. Most spouses own their homes jointly, meaning that both of them are listed on the deed to the home. In a divorce proceeding, the settlement agreement often requires one spouse to convey his or her interest in that home to the other spouse, so that only one spouse will own the home after the divorce. A quitclaim deed is usually used to eliminate one spouse’s interest in the home

Contract for deed: A Contract for Deed is a tool that can allow buyers who either don't qualify for traditional lending options or who want a faster financing option to purchase property. Under a Contract for Deed, the buyer makes regular payments to the seller until the amount owed is paid in full or the buyer finds another means to pay off the balance. The seller retains legal title to the property until the balance is paid; the buyer gets legal title to the property once the final payment is made. If the buyer defaults on the payments, the seller can repossess the property. In some states, a seller who repossesses a property must reimburse the buyer for the fair value of improvements to the house, as well as a reasonable amount for rent.

The most desirable form of deed for a seller is a quit claim deed, because a seller is relieved of his responsibilities, and the most desirable deed for a buyer is warranty deed because the buyer is protected even after the contract takes place.