Definition
A Deed is the legal document that transfers ownership (title) of real property from the grantor (seller/transferor) to the grantee (buyer/transferee).
In most transactions, the deed is signed, notarized, delivered, and then recorded with the county to give public notice of the ownership change.
Key Parties
- Grantor: The person or entity conveying the property.
- Grantee: The person or entity receiving the property.
What a Deed Typically Includes
- Names of grantor and grantee
- Legal description of the property
- Statement of consideration (price or other value)
- Type of deed and warranties (if any)
- Signature and notarization requirements
Common Types of Deeds
- General Warranty Deed: Strongest seller warranties—covers title defects even from prior owners.
- Special Warranty Deed: Seller warrants only against defects arising during the seller’s ownership period.
- Quitclaim Deed: Conveys whatever interest the grantor has (if any) with no warranties.
- Bargain and Sale Deed: Conveys title with limited or no warranties (varies by state).
Why It Matters to Investors
- Title risk: Deed type affects the buyer’s remedies if title problems arise.
- Financing: Lenders often require certain deed forms and title insurance.
- Closing execution: Errors in the legal description or parties can cloud title.
- Entity transfers: Deeding into an LLC/SPE must be done correctly to preserve protections.
Example
A buyer acquires a commercial building using a newly formed LLC. At closing, the seller signs a special warranty deed to the LLC, and the deed is recorded. The buyer also purchases title insurance to protect against unknown prior title defects.
Common Pitfalls
- Confusing deed type: Warranty scope differs materially between deed forms.
- Not verifying vesting: Deed must match the exact legal name of the buyer entity.
- Errors in legal description: Can create boundary/title disputes.
- Assuming recording is automatic: Delays can create priority issues with other filings.