Understanding Property Deeds in Residential Real Estate Sales
A home buyer's guide that thoroughly explains the basics of property deeds and their purpose in residential real estate sales.
Property deeds are used to transfer property in a residential real estate sale. The following Home Buyer’s Guide article provides information to help understand the basics of property deeds and how they operate in residential real estate sales. For a more detailed explanation of deeds in real estate transactions, buyers can seek input from their North Carolina real estate agents and the real estate attorneys involved in their closing.
What is a Deed? Definition of Property Deeds
In residential real estate sales, a deed is the instrument used to transfer ownership of real estate property from a buyer to a seller. This transfer of ownership must be in writing and notarized. After a successful North Carolina real estate closing, a buyer’s property deed will be recorded in the county where the property is located. The property deed will contain the names of the past owner (grantor) and the new owner (grantee) along with a legal description of the property.
What are the Types of Property Deeds?
Three of the most common types of property deeds in North Carolina residential real estate sales are warranty deeds, quitclaim deeds, and grant deeds. Below, we offer a brief description of each of these deeds used to transfer ownership of property in a real estate transaction.
A warranty deed is one of the most commonly used deeds in real estate sales. A general warranty deed transfers ownership and explicitly promises the buyer that the seller has a title to the property that is free of liens or other claims of ownership. This type of deed requires an acknowledgment of the grantor’s signature. If promises that were made by the grantor turn out to be untrue, the transferring party (grantor) agrees to compensate the buyer.
Special or limited warranty deeds are similar to general warranty deeds but do not offer the same protection for the grantee. With a special or limited warranty deed, the grantor only warrants that there are no title defects while the grantor owned the property. This offers more protection, however than the quitclaim deed.
Another type of deed used to transfer ownership rights to property in North Carolina is the quitclaim deed. This deed transfers whatever ownership rights a grantor has to a property to a grantee without any warranties that the property is free of liens, claims or other title defects. Quitclaim deeds are often used in transactions that do not involve a sale. For example, a quitclaim deed is useful in divorces when one spouse wants to transfers rights to the other spouse.
The final kind of real estate property deed discussed in this Home Buyer Guide article is the grant deed. Along with transferring ownership from the grantor to the grantee, a grant deed also makes specific promises. With a grant deed, the grantor promises that the title has not been previously transferred and that there are no encumbrances except for those set out in the deed.
How Will Buyers Hold Title to Real Estate?
When buying a home in North Carolina, the home buyer will also need to choose how she or he wishes to hold title on the deed. Three of the options available are sole ownership, joint tenants with right of survivorship or tenants in common. Discuss your options with your North Carolina real estate broker and seek legal advice from a real estate attorney before making your final decision.
After reading this real estate article, buyers should have a better understanding of property deeds in residential real estate sales. If you have further questions about deeds in North Carolina or wish to discuss your goals for buying a new home in Chapel Hill, Raleigh, or Durham, do not hesitate to contact us today.