Real estate transactions often involve large sums of money. In order to protect the financial interests of the parties involved in the transaction, documentation is required to ensure that the buying and selling of a piece of property is legal.
One of the most important documents involved in any real estate transaction is the deed. A deed is essentially a piece of paper that legally transfers ownership of the property from one person or entity to another.
There are two primary types of deeds, and understanding these deeds will help ensure that your next real estate transaction runs as smoothly as possible.
1. The Warranty Deed
Perhaps the most common type of deed involved in modern real estate transactions is the warranty deed. This deed gets its name from the fact that the seller guarantees the property is clear of any third-party claims when completing the transfer.
Purchasing a piece of property with a warranty deed can help you protect your investment against potential claims in the future. If someone comes along after you purchase a piece of real estate and claims that he or she is a partial owner of the property, a warranty deed allows you to seek financial restitution against the original seller in a court of law.
Whenever you are completing a real estate purchase, you should strive to obtain a warranty deed.
2. The Quitclaim Deed
Another type of deed that is commonly utilized in real estate transactions is a quitclaim deed. These types of deeds differ from warranty deeds in that they do not provide you with a guarantee that the property you are purchasing is free from third-party claims.
A quitclaim deed provides as-is access to a property. This means that you are unable to seek damages against the seller should it turn out that you purchased property he or she did not have a legal claim to in the first place. Quitclaim deeds are commonly used to transfer ownership rights from one spouse to another after a divorce or to transfer property between family members.
If you are being offered a quitclaim deed by someone you don't know, you will need to thoroughly investigate the title of the property to ensure that it is free and clear before making a purchase.
Understanding real estate deeds can be a useful way to avoid potential financial problems after completing the purchase of a piece of property. Be sure that you understand the differences between a warranty deed and a quitclaim deed so that you can obtain the right documentation during your next real estate purchase.
Contact a law office like Steve Butcher Sr for more information and assistance.