What to look for on your property deed

Owning property, especially land, used to be a luxury only for the wealthy. Fortunately, the barriers have slowly been lowered and more and more people have the opportunity to become homeowners and buy land. Because so many individuals own real property and property is being bought and sold every day, there's a need to have some tangible way to determine who owns a property.

The solution?... property deeds.

When a property is sold, the seller transfers his rights to the buyer in a document called a deed. A property deed is a written instrument that conveys ownership of real estate from a grantor (seller) to a grantee (buyer). Deeds seem simple enough. After all, how complicated can a one-page document be? But a property deed can be deceptively complicated if you don’t know what to look for and you're unfamiliar with the language used. It’s extremely important to take a close look at your deed to be clear on what it says and to make sure it says what you want it to. Here are a few key components to look for on your deed.

To be legally operative, a deed must contain certain elements determined by each state. There are several elements that are common in most states such as the property must be sufficiently described. The document must be in writing and nowadays is usually on a prefilled form. The grantor is required to be competent and the deed must be signed by all the owners to convey the entire property. The document must identify the grantee clearly with certainty. The language used in the deed matters. Many times people have to get deeds fixed because the language used was incorrect. The deed should contain words like conveyance, convey and warrant, or quit claim. The words used here are vital as they affect the interest and protection the grantee will receive as well as the obligations of the grantor. The deed must be signed by the grantor or grantors and notarized. The deed must be delivered and accepted by the grantee or someone acting on their behalf.

There are several ways to own property, and the form of ownership is an important component to look for on your deed. Fee simple means you own the property and all the property rights outright. Life estate means you possess and use the property only during your lifetime. You can’t sell the property and when you die, ownership will transfer to a party designated by whoever created the life estate. Future interest is when you'll own the property sometime in the future. Contingent interest means you'll own the property if certain specified conditions are met. A lienholder would be another form of ownership that could exist if there is a mortgage, lien, or deed of trust on the property.

Also look at who the deed says the property is transferring to. It could be one person or multiple people. Joint tenants means the owners will take the property in equal shares and if you die, your share will automatically go to the other owner. Tenants in common means the owners can take the property in unequal shares and leave it to whoever they want when they die. Tenants by entirety means each owner owns the whole property and can’t transfer their right of ownership without the other owner’s permission.

Pay close attention to the details in the property description. It should describe the type of property and the precise boundaries of the parcel including size, plot measurements, and land survey analysis. To find out more about various land types, read our blog discussing land use and property types. When thinking about the size if you're unsure about the size of an acre, take a look at our article on how big is an acre. Some people recommend getting a land survey before you buy land to make sure the boundaries on the deed are correct. The deed should also denote if there are any easements transferred with land, and where they're located.

A crucial element to look for on your deed is restrictions. These restrictive covenants limit what can be done to a property. The land does not have to be part of a homeowner’s association to have restrictions. Deed restrictions are transferred with the land no matter how long ago they were put in place. You’ll want to be certain if and what restrictions exist, because they may prevent you from using the land the way you had intended to. There could be building restrictions that won’t allow you to build at all, or that limit features such as number of bedrooms, building height, fencing, or even color schemes. If you're looking for a property with no restrictions, take a look at our unrestricted land for sale.

Here’s a brief overview of several different types of property deeds. One of the most important aspects to be aware of is that different deeds provide different levels of protection to the buyer.

General warranty deed - The seller guarantees the title to the property is clear and therefore has a right to sell it to the buyer. With this type of deed, the buyer is protected against title defects throughout the entire history of the property.

Special warranty deed - Like a general warranty deed, the seller again guarantees the title to the property is free and clear and therefore has a right to sell it to the buyer. But unlike the general warranty, the buyer is only protected against title defects that arose during the period of time the current seller owned the property.

Grant deed - A grant deed is similar to a general warranty deed except the seller doesn't guarantee the title is free and clear. If a claim is filed, the seller is not promising to warrant or defend against it.

Quitclaim deed - The seller conveys any legal interest in the property to the buyer but no guarantees or title covenants are made. This includes whether or not the seller actually owns interest in the property or if the title is free and clear.

Trust deed - An agreement between a lender and a borrower to give the property to a neutral third party who will serve as a trustee who holds the property until the borrower pays off the debt. Until the debt is completely paid back, the borrower keeps the equitable title to the property and maintains full responsibility for it. The trustee holds the legal title to the property.

Tax deed - The ownership of a property is transferred to a government entity when the property owner does not pay the taxes due on the property. The government entity has the right to sell the property to collect the delinquent taxes and transfer the property to the new buyer.

Gift deed - In a gift deed, a property is voluntarily transferred from one party to another without any exchange of money. Gift deeds are common among relatives and loved ones and they happen immediately as opposed to a “will” which transfers the gift after death.

Bargain and sale deed - The unusual characteristic of this type of deed is it essentially comes with no warranties at all. It’s implied only that the seller has full title to the property. These deeds are sometimes used in foreclosure and tax sales.

A title is not legally transferred until the deed is recorded at the local courthouse. Many people actually don't know what the difference between a property deed and a title is. Some states have what’s known as a race statute, which interestingly enough means whoever records a deed at the courthouse first is the new owner. Since most real estate is valuable, any type of ownership document associated with real estate is valuable and should be carefully considered and constructed. Not only are deeds important in the present in order to transfer property, but they can be the deciding factor in settling ownership disputes in the future.