A real estate purchase is overwhelmingly viewed as a financial transaction. Both the buyer and the seller agree on a negotiated sales price and terms upfront, and these factors may be renegotiated based on property condition and other factors. In many transactions, the borrower focuses intently on lining up financing to pay for the purchase and little attention is placed on the actual transfer of ownership. However, this is also a complex legal transaction that cannot be completed with an executed warranty deed.
The Seller’s Clear Title to the Property
In order for a seller to convey property to a buyer through the execution of a sales contract, the seller must own the property outright. Other parties may hold claim to the property, such as another individual who may have claim through a fuzzy title history. A lender may also hold claim to the property through a deed of trust. Typically, the title company will thoroughly research the property’s title history and will ensure that the seller has the ability to legally execute the transfer of title and convey ownership to the buyer.
In fact, the deed that is signed by the seller at the closing table specifically provides the buyer with a legal guarantee that the property is owned free and clear. Furthermore, it certifies that the seller has the right to complete the transaction. When this document is filed publicly with the county department responsible for public records, the buyer becomes the new legal owner on record.
Critical Information on the Deed
Before the document can be properly filed and recorded by the appropriate county department, it must be reviewed to ensure that it contains all essential data. This begins with a property description. Typically, this description exceeds the physical street address. It also includes the legal description, which may also be found in the sales contract, the title commitment, the survey and other related documents that are critical to the transaction. In addition, the deed provides the full legal name of the grantor, who is the seller in the transaction. The full legal name of the grantee, or buyer, is also provided. In some instances, the name of the individual who prepared the deed must appear on the document. Finally, the document must be notarized, so it should have the notary’s seal. The live signatures and seal should be provided to the government agency rather than a photocopy.
Why You Need a Warranty Deed
In many cases, the warranty deed is prepared by a professional for the buyer and seller to sign at the closing table. It may be prepared by a real estate attorney or by a professional working at the title company’s office. The reason for the deed may be obvious when the buyer and seller are strangers. However, some real estate transactions are between family members or others who are closely associated and who may have significant trust in each other. If the buyer is using a mortgage, the mortgage lender usually will require an executed deed as a condition of closing regardless of how closely associated the buyer and seller are. This is because the lender has a claim on the property that is being used as collateral for the loan, and it needs assurance that the title to that property is clearly in the borrower’s name.
On the other hand, if the real estate purchase is a cash transaction between family members or other close associates, a quitclaim deed may be used as an alternative in some areas. Both parties must agree to the use of this form. This document essentially removes the seller’s liability if title issues arise in the future.
General Versus Limited Warranties
There are two primary types of warranty deeds that may be used in a real estate transaction, and these are general and limited warranty deeds. General warranty deeds executed by grantors attest that the property has a clean title overall and without exception. This means that there are no known title issues before the grantor took ownership of it. On the other hand, limited warranty deeds attest that the seller is not aware of title issues since he or she has owned the property. Through this legal document, the grantee can take legal action in court if a title discrepancy arises.
Both types of deeds allow the grantor to provide details about known encumbrances to title. This may include an easement, which may be disclosed in the title commitment and other documentation as well. It may also include prior mortgages, deed restrictions for the neighborhood and other types of encumbrances. Generally, the encumbrances that are disclosed by the grantor in the deed are not subject to legal action.
Filing the New Deed
When the deed has been signed by both parties in the presence of a notary and has been properly notarized, it is not yet a valid legal document. The deed must be submitted to the appropriate government agency. This is usually a county office that is tasked with maintaining public real estate records. Both parties should request a copy of the filed document that shows the filing date, and they should maintain it in their permanent records.
Creating a Deed
While many warranty deeds are prepared by title agency representatives or attorneys, you may also fill out the deed form online and print it. Once it is prepared, both parties can sign the document in the presence of a notary. The document can be filed with the government agency by the grantor or the grantee, and it will become an official public record.
Creating and filing your own deed is a stress-free, convenient and affordable alternative to the traditional method. Through our website, you can find the deed form that you need with ease, and you can avoid the time-consuming hassle that you may otherwise need to go through. Regardless of which method you use, the end result will ultimately be the same. With this in mind, it makes sense to print your deed today.