As a follow up to last week’s blog (“Slow Down on that Quitclaim Deed”), we had quite a few inquiries on the types of deeds used in real estate transactions and the fundamental differences of each. The FR/BAR contract stipulates (see Standard H) that either a statutory warranty, trustee’s, personal representative’s, or guardian’s deed may be used to convey title to the property being purchased. Most new construction contracts specify that only a special warranty deed will be used to convey title. On occasion, we have buyers seeking to amend new construction contracts in order to obtain a general warranty deed in its place. However, Buyers are largely unsuccessful since the Builder’s intent is to reduce its liability. So, what are the difference between these various deeds?
* Quitclaim Deed – a Seller is deeding whatever it may own to the Buyer, but provides no warranties of title. Most title underwriters will not insure a transaction that uses this type of deed. Further, the use of a Quitclaim Deed may cut off title coverage as we covered in last week’s blog.
* Special Warranty Deed – the Seller is deeding its interest to Buyer and provides a warranty of title from the day the Seller bought the property to the day the Seller sells the property. Most Sellers do not want to expand their liability and warrant title too far back. The use of the Special Warranty Deed by Sellers and Builders substantially limits their liability by limiting the duration of the warranty.
* General Warranty Deed (most commonly used) – the Seller is deeding its interest to Buyer and providing a warranty of title from essentially the beginning of time (a bit of an exaggeration, but assume from when the land was first established) until the Seller sells the property. Most Sellers have no idea what happened before they took ownership and therefore, generally do not want to make this representation, or warranty, to Buyers. Note that a Statutory Warranty Deed is a short form of the General Warranty Deed that was created under Florida Statute Sections 689.02 and 689.03 and is commonly used in real estate transactions.
* Trustee’s Deed – the Seller is deeding its interest to a Buyer where a trust is taking title to the property. This particular deed contains key language referencing trust powers pursuant to Florida Statute 689.073 and is used as an estate planning tool. The trust powers language in this kind of deed assists the trust when the trust sells the property because the future transaction will not require the trust, now seller, to produce a full set of the trust documents.
* Guardian’s Deed – a guardian is appointed to sell and convey the property to a third party Buyer for a Seller who is unable to sell the property itself because the Seller is a minor or otherwise lacks the capacity to sell the property. The guardian serves in a fiduciary capacity and is transferring the property on behalf of someone else and conveys the property with little knowledge about the condition of the properties title. Therefore, the guardian is not providing any warranties of title unless otherwise required per the contract.
* Personal Representative’s Deed – the Seller was appointed by the Court as a Personal Representative with the right to act on behalf of the deceased property owner and convey the real property to a third party Buyer. Since the Seller is merely serving in a fiduciary capacity and transferring the property on behalf of someone else, without real knowledge about the property, the personal representative is generally not providing a warranty of title unless otherwise required per the contract.
The above gives you a basic guide of the commonly used deeds in real estate transactions. Should you have further questions please feel free to contact your local real estate attorney to provide guidance on which deed should be used in your transaction.
Berlin Patten Ebling, PLLC
Article Authored by Jamie A. Ebling, Esq. firstname.lastname@example.org
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