In Part 1 of this two part article we clarified the difference between deed and title. As a result, you should know that a deed is a written contract used to legally transfer title. For the purpose of simplicity and relevance, we will assume the real property being transferred by deed is a house being sold by a homeowner (seller) to a buyer. Part 2 of this article will focus on the four most common types of deeds used to transfer ownership when you sell a house.

Most Common Types of Deeds

The four most common types of deeds used to transfer ownership when you sell a house are general warranty deeds, special warranty deeds, bargain and sale deeds, and quitclaim deeds. There are other types of deeds use to transfer title for special purposes but are not the focus of this article. We will explain the four most common types individually.

General Warranty Deed: A general warranty deed provides the buyer of the house with the most possible protection against past and future claims on title. The seller of the house is essentially guaranteeing there are no limitations, encumbrances (i.e. liens, deed restrictions) on the title that are not clearly stated in the deed. The seller is also guaranteeing the absence of any title defects that occurred prior to and during the seller’s ownership of the house. These guarantees are being made forever by the seller. If defects are found later and were proven to have occurred prior to or during the seller’s ownership, the seller would be responsible for the necessary actions to clear/perfect the title of the buyer. The seller also is responsible for defending the buyer against third part claims on the title.

Special Warranty Deed: A special warranty deed carries a limited amount of protection against title defects. The seller is only warranting the title against defects occurring during his/her ownership. The seller is not guaranteeing that no encumbrances or title defects occurred prior to the seller’s ownership. Typically fiduciaries (i.e. executors of wills, trustees, etc) use a special warranty deed to transfer title. Sellers who are executors or trustees are usually in no position to guarantee the title on behalf of the preceding owner. As a result, they can only guarantee nothing has been done during their ownership to cloud or cause a defect in the title of the property.

Bargain and Sale Deed: General warranty and special warranty deeds both offer guarantees against encumbrances and defects in title when you sell a house. A bargain and sale deed offers no such warranty against encumbrances or defects in title. The seller is declaring they have an interest in the property. The bargain and sale deed conveys the seller’s interest to the buyer with no guarantee to warrant or defend the title against future claims that may arise as a result of title defects. The bargain and sale deed is most often the deed that is transferred from a foreclosure or tax sale—hence, the name. Since the seller, usually a bank or tax authority, did not occupy the property, it would not necessarily know of any encumbrances that may have been attached to the property by the previous owner. As a result, the seller does not want to guarantee against any encumbrances.

Quitclaim Deed: A quitclaim deed releases a seller’s interest in a property, if any, to a buyer with no warranties at all. Often the seller of a quitclaim deed openly admits to not knowing the condition of title or whether they hold title at all. The seller does not state in the deed that he/she has any title or interest to the property and essentially quits whatever interest he/she may have. If it is later found that the seller has no real claims to the property, the buyer receives nothing even though the buyer may have paid the seller money for the property. As a result, a quitclaim deed offers the least title protection to a buyer. An instance of use of a quitclaim deed can occur when a seller has inherited a property. For example, the seller inherits a property and wants to sell it quickly for cash. He/She doesn’t want to guarantee something that cannot be known with certainty. Thus, to limit liability, he/she sells only the interest in the property—whatever it is.

Given the potential issues inherent in property ownership, it is highly recommended that buyers seek to obtain appropriate owner’s title insurance in accordance with the applicable risks.

Conclusion

Most states share the same criteria for a deed to be considered valid and enforceable. Nevertheless, it is important that you learn about the unique criteria, rules, and regulations in your state when you are ready to sell a house or buy a house. Given the legalities and complexity involved in selling or buying a house, it is recommended to have a highly competent real estate agent, real estate attorney, and title company on your team.

Disclosure Notice: The author is a licensed Realtor in the State of Texas under the brokerage of Above and Beyond Realty, LLC.

The post Deeds and Title Part 2: Transferring Ownership When You Sell a House appeared first on D & F Holloway Property Holdings.

In real estate there are a number of terms that get thrown around regularly without understanding of the correct meaning of the term. The strange thing about it, this is mostly done by so called real estate professionals. In this two part article I want to focus on a fundamental term used in real estate ownership. It is very important for homeowners and real estate professionals to understand the meaning of the term “deed” and how ownership is transferred from the homeowner to another party when they sell a house. The focus of this article is on transferring home ownership; however, deeds can be used to transfer title in all real property.

Title versus Deed

The term title refers to ownership rights in real property. When a person holds title to a house what they really hold are certain rights. These rights include the right to possession, enjoyment, control, and use of the owned property. I guess you could say that title is not a physical tangible thing. A deed on the other hand is tangible. A deed is a written contract used to legally transfer title when you sell a house to another person or entity. Furthermore, when a deed is recorded in the public records it serves as physical proof of the title holder’s ownership rights to the house. As a result of these differences, the terms title and deed should not be used interchangeable. Nevertheless, many people still use the terms incorrectly.

Elements of a Valid Deed

Grantor: The homeowner who voluntarily conveys title to another person when they sell a house

Grantee: The person who accepts title from the homeowner when they buy a house

Consideration: A promise by the grantor and grantee to exchange something of value to show both parties agree to the terms of the deed. This is usually money but can also be in other forms.

Granting Clause: The formal words that state the grantor’s wish to transfer his or her current title to a house.

Habendum Clause: Describes the extent of the ownership that is being transferred by the deed.

Legal Description: A description of the location of the property accepted by a court of law. Street addresses and other informal land descriptions are not sufficient for deeds.

Encumbrances: Any claim or liability attached to the property that may lessen the home owner’s rights or the value of the property. The most common Encumbrance that affects a homeowner’s title is a lien.

Exceptions or Reservations: An Exception excludes from transfer some part of the property that is being transferred by the deed. Reservations create a new right out of the thing granted on behalf of the grantor.

Signature of Grantor: All the grantors listed on a deed must sign the deed to transfer title. There are unique exceptions (i.e. signature by mark, signature by attorney-in-fact) if a grantor is unable to sign.

Acknowledgement: When a grantor signs a deed before a public notary, he or she is making a formal declaration they are acting voluntarily. It also serves at public proof that the involved parties are who they say they are.

Delivery and Acceptance: Title actually passes from the grantor to the grantee when the deed is delivered to and accepted by the grantee. Acceptance means the grantee agrees to be bound by the terms of the deed. This should be in writing; however, acceptance can also be inferred by certain acts.

Summary

Most states share the same criteria for a deed to be considered valid and enforceable. Nevertheless, it is important that you learn about the unique criteria, rules, and regulations in your state when you are ready to sell a house or buy a house. Given the legalities and complexity involved in selling or buying a house, it is recommended to have a highly competent real estate agent, real estate attorney, and title company on your team. In Deeds and Title Part 2 to this article, we will focus on the types of deeds involved in transferring home ownership and title.

Disclosure Notice: The author is a licensed Realtor in the State of Texas under the brokerage of Above and Beyond Realty, LLC.

The post Deeds and Title Part 1: Transferring Ownership When You Sell a House appeared first on D & F Holloway Property Holdings.

When it comes to selling a house, it can be an extremely emotional and nerve racking event. In many cases individuals are trying to sell their house because of a job transfer, job loss, financial hardship, and even loss of a spouse. Having to sit by and experience the pain of the house not selling only adds and prolongs the frustration. As with most things in life, there is usually a reason why the house is not selling. We will address a few things that you can fix quickly to drastically improve the home’s marketability and odds of getting sold.

Pricing

The price for which you want to sell your house, the amount of “walk-a-way” money you want, and the amount you think your house is worth are all irrelevant to the buyer of the house. The market will tell the buyer what the house is worth and how much to pay for it. How does the market do this?  For example, you have a house in a neighborhood of 20 other houses of comparable size, age, style, bedrooms, bathrooms, and amenities. Suppose there were 6 houses sold in the past 90 days for $100K each. You decide to list your house for $120K. If buyers know they can buy a comparable house for $20K less than yours, they would be less likely to buy your house. In this case, the market is telling the seller the house is worth $100K. As a result, you will need to consider listing the house in line with what comparable homes are selling for or be prepared to wait for it to sell. Obviously, this is a simple example but hopefully you get the point. A good real estate agent should be able run a report of recent comparable sales and properly advise on the listing price taking into account the seller’s situation and market conditions, etc.

Marketing

If people can’t find your house, they can’t see your house. The majority of homebuyers today are searching online. Your house will need to be listed on all of the major websites where buyers are searching (i.e. Zillow, Trulia, Realtor.com). Assuming your house is listed with a good real estate agent, it should also be marketed in the local Multiple Listing Service along with a for sale sign in the yard. A good agent will also employ other helpful marketing techniques such as appropriate staging, conducting open houses, networking with other agents, distributing flyers, and posting high quality pictures and/or video.

Repairs

That water stain on the ceiling, leaky faucets, broken light fixtures, inoperable range and hood, and rotted siding are sure to draw concern from the buyer and show your property in a negative light. Assuming you have the money available, reasonable repairs that are sure to be visible to the buyer should be completed. It also may be a good idea to replace certain items that are functional but overly outdated (appliances, fixtures, etc). You can include making repairs in your negotiation strategy.

Curb Appeal

If the buyers don’t like the look of your home from the outside, they will probably not be inclined to see the inside. When shopping for my own primary residence, there have been homes I have passed on viewing because of the curb appeal. Improving the landscaping is a must. Make sure pathways to the house are swept and cleaned. Address chipped paint, damaged brick, siding, gutters, etc that will detract from the appeal of the house. Just like the beautiful girl or the handsome guy, their looks make you want to get to know them on the inside.

Flexibility

If you are trying to sell your house, you should be prepared to let people see it without obstruction, interference, and at flexible times. Buyers will need to see the house at varying times due to work schedules, child care obligations, and agent availability. If you are too rigid with the times you are willing to show the property, you may be reducing the number of potential buyers. While buyers are seeing the house, it is even recommended that the seller leave during this time so not to smother the buyer. Many buyers are uncomfortable speaking openly and viewing the property knowing the seller may be listening and watching.

Critical Factors You Won’t Be Able to Change

You will not be able to change the location of your house. As the old saying goes, real estate is all about location, location, location. No matter how nice the house looks, if it is located at a busy intersection, across from a waste treatment plant, in a declining neighborhood, this will have a significant impact on why your house is not selling. Unfortunately, you can’t pick the house up and move it.  You will likely have to adjust your selling price to account for the undesirable effects.

The overall condition of the local market at the time will also have a significant impact on why your house is not selling. If the market is a buyer’s market, meaning there are a lot of homes on the market for buyers to choose from, your house may take longer to sell and for less. If you have some flexibility in regards to when you need to sell, you might consider taking the house off the market. You could always wait until inventory levels (houses available for sale) drop and the market conditions improve in the favor of sellers. Otherwise, you will have to list the house in line with what the current market dictates.

The author is licensed Realtor in the State of Texas under the brokerage of Above and Beyond Realty, LLC.

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