A deed by definition is a document that transfers ownership of land from one owner to another. Different deeds can convey different types of rights, and some include a warranty, which is essentially a legal promise that the person transferring the land actually has rights to it and nobody else does, other than as disclosed.
TL;DR (Too Long; Didn't Read)
A non-warranty deed is a deed that doesn't make any promises that the person transferring rights to real estate actually has those rights or that nobody else has rights to the land. It's often used interchangeably with the term "quitclaim deed."
How a House Deed Works
In the United States, land ownership is a matter of public record. It's possible to go to a local registry of land records and see who owns any particular parcel of land as well as whether there are mortgages, liens, mineral rights agreements or other documents transferring some rights to the land. In many jurisdictions, it's also possible to search and view digital versions of these documents online.
When one person sells or gives land, he usually does so with a legal document called a deed. The deed describes exactly what property is being transferred from whom and to whom. It's filed at the local records office, usually maintained by a city or county government. Exactly what language is used in different types of deeds varies somewhat from state to state.
You may also hear the term "house title," referring to ownership of a house and the land it's on. When it comes to real estate, the difference between a deed and title is that a deed is a legal document, while a title is simply the right to the land. Unlike with cars, where there's a physical document called a title that shows who owns the vehicle, there's usually no document called a title associated with land in the U.S.
Types of Deed
There are a variety of types of deed that can be used to convey property from one owner to another. There are sheriff's deeds used after a foreclosure sale, court order deeds used after a court rules on a land dispute of some sort and specialized deeds, often called master deeds, that are used to create condominiums.
There are deeds that convey limited rights to the land, such as mineral deeds that might allow someone to extract oil or gas from the property but not build buildings or reside on it. Each of these deeds will usually take a particular legal form required by state law and usually should be filed at the local records office when completed.
Deeds and Mortgages
When you buy a property with a mortgage loan or take out a mortgage on a property, records of the mortgage are also filed at the land records office. In some states, this is a legal document called a mortgage, while other states use what's called a deed of trust. Some states allow forms of either document to be used.
A mortgage spells out the terms of your loan and how the bank may foreclose on it if you fail to make payments according to your agreement, though you retain title to the land until this happens.
A deed of trust works slightly differently, technically transferring the land to a third-party trustee who holds on to it until the mortgage is paid off. If you stop paying, the trustee can foreclose on the land on behalf of the bank or mortgage lender. In most states, the trustee is a law firm or specialized title company, but in Colorado, it is a public official. In Colorado, there's one public trustee's office per county, and they're expected to work with borrowers and lenders as a neutral party in the event of a foreclosure.
Generally, deed of trust states make foreclosure somewhat easier, while mortgage states require lenders to go to court to foreclose on property. When a mortgage is paid off, a document called a satisfaction of mortgage (or a similar name) is usually filed at the land records office recording this fact. Lenders are generally required to file this document in a timely manner, though you should ensure the lender does so to make sure the title to your land is properly documented.
In deed of trust states, the trustee will generally file a new deed transferring the deed back to the borrower once the mortgage is paid off, and the effect is essentially the same.
How Warranty Deeds Work
Often when you purchase land, the document used to transfer the land is something called a warranty deed. That generally means that the seller is guaranteeing that she has the right to the land and that nobody else does. If the buyer later discovers a problem with the title to the land, such as an undisclosed partial owner, easement or lien on the property, the seller is legally liable.
In some cases, a document called a special warranty deed or statutory warranty deed is used instead. That form of deed, if allowed by state law, is simply guaranteeing that the property didn't get transferred or encumbered by something like a lien or mortgage while the person transferring it owned it. It doesn't make guarantees about situations that could have arisen under previous owners. In some cases, a specific form spelled out in state law is used for a statutory warranty deed.
Exactly how warranty and special warranty deeds work varies from state to state, so it's best to talk to a lawyer in your jurisdiction if you have any questions about what's legally guaranteed and what's not guaranteed by a deed.
Understanding a Deed Without Warranty
A non-warranty deed makes no guarantees about the ownership of a property. They're sometimes also referred to as quitclaim deeds since they just represent one person abandoning any rights he has to the land when giving it to someone else. They can be used in some cases to transfer land between related organizations or between family members. Warranty deeds are separate from house warranties. They don't make any claims about the condition of the house or land.
About Title Insurance
If land has unclear title or a surprise appears in its legal history that causes it to have disputed ownership, that can be a big headache for anyone with rights to it. That includes banks and mortgage companies that may have issued loans backed by the land.
A warranty deed helps to legally protect against these situations but doesn't necessarily provide a great recourse for land buyers since suing the previous owner of the land may not be sufficient to undo the harm caused by a title dispute. A previous land owner may be difficult to track down or may not have the funds to make the buyer whole.
To help prevent these issues, title insurance is often purchased when land is bought and sold. Title insurance companies will thoroughly research the history of land, often traveling to county records offices to peruse old deeds and look for any unwelcome surprises. Then, they'll issue an insurance policy covering any title issues that may arise.
- Cornell Legal Information Institute: Deed
- Nolo: Quitclaim Deed
- Nolo: Warranty Deed
- Bankrate: What You Should Know About Quitclaim Deeds
- Ward and Smith: Deed Warranties and Why They Should Matter To You
- Express Title and Closing: Understanding the Various Types of Warranty Deeds
- Rocket Lawyer: What Is a Warranty Deed vs. a Quitclaim Deed?
- Rocket Lawyer: What's the Difference Between a Property Deed and a Title?
- Rocket Lawyer: How Does a Mineral Deed Work?
- FDIC: Obtaining a Lien Release
- Rocket Lawyer: What Is a Deed of Trust? Definition and How it Works
- The Durango Herald: Colorado’s Unique Position of Public Trustee
- MintzLaw: Failing to File a Satisfaction of Mortgage – The Afterthought That Can Haunt Your Property...
Steven Melendez is an independent journalist with a background in technology and business. He has written for a variety of business publications including Fast Company, the Wall Street Journal, Innovation Leader and Ad Age. He was awarded the Knight Foundation scholarship to Northwestern University's Medill School of Journalism.