By Joseph G. Ballstaedt
801-365-1021
joe@snjlegal.com
In Utah, owners of real estate generally transfer their land using one of three types of deeds: 1) a warranty deed; 2) a special warranty deed; or 3) a quitclaim deed. This article briefly explains the differences between those different deeds and when parties use—or should use—one type of deed rather than another.
Warranty Deed
A warranty deed in Utah is a legal document used to transfer real property ownership from one person or entity to another. (A person transferring the land is called a “grantor” and the person receiving the land is called a “grantee.”) A warranty deed is probably the most common type of deed used when a seller transfers residential real estate to a buyer, but it is also common in commercial transactions.
When a grantor (usually a seller) executes a warranty deed, it essentially promises or guarantees to the grantee (usually a buyer) the following:
· The grantor has the right to possess and sell the property.
· The grantor fully owns all traditional rights in the property (sometimes called a fee simple interest).
· The grantor is transferring those rights to the grantee.
· There are no outstanding liens on the property (such as a bank loan or trust deed), encumbrances, or title defects that could affect the grantee’s ownership rights.
· The grantor promises to defend the grantee against any legal claims that may later
arise from a third party claiming an ownership interest in the property.
It goes without saying that a buyer of real estate invests a significant amount of money in purchasing real estate. Before a buyer can move forward, a warranty deed is generally required, often by the buyer, the lender, and the title insurance company. A title company might not issue a title insurance policy unless the seller transfers the property by warranty deed, and a lender won’t likely proceed without an insurance policy.
Special Warranty Deed
In Utah, a special warranty deed is similar to a warranty deed, but it only provides a limited warranty of title to the grantee. Unlike a general warranty deed, which provides a broad and unconditional warranty of title, a special warranty deed only warrants against title defects or claims that arose during the grantor’s ownership of the property. In other words, the grantor of a special warranty deed only guarantees that it did not create any title defects or claims during the time it owned the property. The grantor makes no promise against any defects or claims that existed before acquiring the property.
This type of deed is commonly used in commercial real estate transactions where the seller pushes some liability and responsibility onto the buyer. The buyer is expected to conduct due diligence and assume some of the risks associated with purchasing the property. Sometimes a special warranty deed is also used in residential real estate transactions, but buyers prefer a warranty deed and the greater protection against title
defects and claims that come with a warranty deed.
Buyers should carefully review the terms of a special warranty deed and consider obtaining title insurance to protect themselves against any undiscovered defects or claims.
Quitclaim Deed
A quitclaim deed, like a warranty deed and a special warranty deed, is a legal document used to transfer ownership or real property. But unlike a warranty deed and a special warranty deed, which provide certain warranties or guarantees regarding the property’s title, a quitclaim deed only transfers whatever interest the grantor may have in the property at the time of the transfer. That interest may be no interest whatsoever.
What this means is that a grantor of a quitclaim deed is not making any guarantees or warranties about the property’s title or whether there are any liens, encumbrances, or defects that could affect the property’s ownership. Moreover, the alleged grantor does not even claim to have any interest in the property—it simply transfers whatever
ownership interest, if any, it might have to the grantee.
People commonly use quitclaim deeds to transfer land between family members or friends, often through a gift. Quitclaims deeds are also often used to settle property line disputes or other related disputes. They can also be used to clear up any potential title issues or clouds on the property’s ownership.
Because a quitclaim deed does not promise to transfer the grantee anything, it does not provide the protections and assurances of a warranty deed or a special warranty deed. A buyer should almost certainly not use a quitclaim deed in a real estate transaction where the buyer isn’t familiar with the property’s ownership history or potential title issues.
Help with Real Estate Issues
This article discusses only briefly three commonly used forms of deeds used to transfer real property. It does not by any means discuss many issues that arise when parties transfer real estate. If you have questions or concerns about real estate transfers or deeds used to transfer real estate in Utah, I am happy to help. I offer a free consultation.
My direct dial is 801-365-1021, and you can e-mail me at joe@snjlegal.com.
