DEEDS: DIFFERENT WAYS TO TRANSFER OR ACQUIRE REAL ESTATE.
If you are buying or selling a home, the Deed is one of the most important documents. The Deed is the only document that actually transfers title to the property from you (as a seller), or to you (as a buyer). Four of the more common types of Deeds that you may see are a 1) Quit Claim Deed, 2) Warranty Deed, 3) Special Warranty Deed, and 4) Deed in Trust/Trustee’s Deed.
A Quit Claim Deed merely removes an individual from a property’s title. In other words, the individual that executes a Quit Claim Deed is simply disclaiming any interest in the property. The individual obtaining the property via the Quit Claim Deed receives no assurances or warranties as to ownership, or whether the property is free of the interests of any third parties.
Quit Claim Deeds are not generally used in real estate transactions. The contract between the buyer and seller often requires that the seller provide the buyer with “clear and marketable title.” A Quit Claim Deed does not deliver clear and marketable title because it makes no warranties as to property ownership or any encumbrances on the property.
The Warranty Deed is a more common method of conveyance in a real estate transaction. Under Illinois law, any deed that simply states that “seller warrants to buyer,” is guaranteeing the buyer that 1) the seller is the lawful owner of the property, 2) the property is free from encumbrances, 3) the buyer is entitled to possession of the property, and 4) the seller will defend the buyer in court against certain claims to the property. If you are purchasing property, ensure that you are receiving a Warranty Deed.
Special Warranty Deeds are less common, but you may encounter one if you buy property from a bank that recently foreclosed on certain property. The Special Warranty Deed only provides guarantees during the time that the bank owned the property. It does not provide any warranties related to the time period when the previous owner, who lost his or her interest due to foreclosure, owned the property.
Finally, both buyers and sellers of property may see conveyances that are labeled as a Deed in Trust or a Trustee’s Deed. A Deed in Trust is simply one that conveys the property into a certain trust. A Trustee’s Deed is a conveyance from the trustee of a certain trust, to another individual or entity. Both a Deed in Trust and a Trustee’s Deed can be either a Quit Claim Deed, or a Warranty Deed. You can tell the form of the conveyance by whether the Deed in Trust or Trustee’s Deed states that “seller quitclaims to buyer” or that “seller warrants to buyer.” Based on that language, the Deed in Trust or Trustee’s Deed will contain the same basic characteristics of a Quit Claim Deed or a Warranty Deed.