A deed may just be a piece of paper, but it is the lifeblood of every real estate transaction. The deed documents who owns the property, and therefore, who can sell it. Sellers and buyers sign a deed at the closing to legally transfer the home or land.
Deeds differ in what they promise a buyer. Here are the five most common deeds used in Florida, and what they mean:
- General Warranty Deed. A general warranty deed provides the most assurances for the buyer, because the seller is making a legal promise that he is the owner. Any (rare) problems with title that may later arise, such as having a long-ago owner claim he never sold his share, remain the responsibility of the seller to fix. This is the most common type of deed in real estate transactions.
- Special Warranty Deed. Here, the warranty is more limited—providing legal assurances only that the seller has not done anything to negatively impact the title, not that title is necessarily clean going back to the property’s beginning. Special warranty deeds are typically used by condominium or subdivision developers, in commercial real estate transactions, or when a person has inherited the property.
- Quitclaim Deed. With a quitclaim deed the seller makes no representation that he/she actually owns the property they are conveying. These may be used to clear title problems, when a business transfers commercial property to a subsidiary, or when a seller wants to include a family member on the deed. I frequently do quit claim deeds for elderly owners who want to add their children to their deed or to sell their home to them outright.
- Life Estate Deed. With a standard life estate deed, you name the person who will inherit your property, but you keep ownership of it during your lifetime. You don’t retain the right to sell or mortgage the property, and you could be liable to the beneficiary if you let a house fall into serious disrepair and therefore lower the value. One danger of adding someone to your deed is that any legal judgments on the newly added person now attaches as a lien on the home.
- Lady Bird Deed. Also known as an enhanced life estate deed, you also keep the right to use the property during your lifetime even as it is transferred to someone else. Here, though, you can sell the property if you want. Because a home owned via a lady bird deed doesn’t go through probate, nor does it jeopardize Medicaid eligibility for the life estate holder, I sometimes use this deed when elderly clients want to pass their home to their children. As with other life estate deeds, though, legal judgments on the children can become liens on your home.
To learn more about real estate transactions and the deed that is best for your situation, contact The Law Offices of Gary Landau