The history of property transfers is fascinating. Just 500 years ago, land was transferred from one person to another via a ceremony. The seller and buyer would meet on the property, where the seller would hand the buyer a ceremonious piece of the land, such as a clump of dirt or a twig. Today, when a couple purchases real estate, a deed provides evidence of a land transaction. This transfer of the title may occur when a property owner voluntarily sells his property to you. However, the transfer may also be involuntary, such as when a foreclosure sale results in transferal of a title as an operation of law. In the first instance, a warranty deed may be used. A trustee deed is required for the latter.
Warranty Deed vs. Deed
What's the difference between deed and warranty deed? A deed transfers a property from a grantor to the grantee. The grantor – the seller – gives the title to the grantee – the buyer. A valid deed is a written document that properly identifies the buyer and the seller, who must be mentally competent and at least 18 years of age. The deed also describes the land using a survey and states the consideration given in exchange for the land. The document includes words of conveyance that indicate the seller's intent to pass the title to the buyer. The deed must also be signed by the grantor and witnesses and delivered to the grantee, as well as recorded by the recorder of deeds.
To further clarify warranty deed vs. deed, a general warranty deed is executed by a grantor to transfer real estate to a grantee. Unlike the trustee's deed, the grantor is responsible for the condition of a title if a warranty deed is used. A warranty deed includes “words of conveyance” that reflect the warranties the grantor makes to the grantee. For example, the grantor warrants he is the lawful owner of the property at the time the deed is executed. The grantor also warrants he has the right to convey the property to the buyer and that the property is free of encumbrances or liens. The deed also requires the grantor to warrant that he will defend the title to ensure the grantee might “enjoy peaceable possession of the premises.”
Understanding the Trustee's Deed
A trustee's deed also helps answer the question, "What's the difference between deed and warranty deed?" A trustee's deed is executed by a trustee to transfer real estate held in trust to someone other than the trustor. Typically, the deed conveys the title to a foreclosed property that is auctioned to the highest bidder at a trustee's sale. If no auction bid is large enough to pay any outstanding debt for which the property serves as security, the deed is transferred to the lender. A trustee's deed does not contain warranties that no encumbrances exist against the auctioned property. As a result, the new owner is responsible for existing liens against the property regardless of whether he was aware of the liens at the time of purchase.
Understanding Title Insurance
Whether you obtain title to your property via a trustee deed or a warranty deed, you may purchase title insurance to assure the title is clear and that judgments do not exist against the property. In this case, the answer to "What's the difference between deed and warranty deed?" is that there is none. The title insurance company conducts a title search before you purchase the property to ensure no outstanding home equity loan exists and that no creditor has placed a lien on the property. A title search will also identify any previous owner's heirs who may have prior claim to the property. A warranty deed vs. deed simply tells the title insurance company what type of deed it is.
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