A property deed is the method in which a Grantor (old owner) transfers ownership of real property to a Grantee (new owner). This transfer of ownership can either be voluntary by both parties or it can be by an involuntary means, such as a foreclosure or tax auction. There are several types of deeds that are recognized in California, and in order for them to be valid and legal, The Department of Consumer Affairs Bureau of Real Estate states that they must contain the following items:
- They must be in writing
- They must properly described the parties involved with the transfer of ownership
- The parties must be both competent and capable of conveying and receiving the grant of the property
- The property must be described in enough detail so that it can be distinguished from other pieces of property
- There must be verbiage that states the property is being granted (such as “I hereby grant”)
- They must be signed by the party making the conveyance
- They must be delivered and accepted
After reading this list, you may be thinking to yourself that there are a couple of items missing. Although these items may be common in some deeds, they are not required by the state of California. For example, the habendum clause (also known as “to have and to hold”) is required by law in some other states, but not in California. Witnesses, a seal, and a date may be other common items included, but they are not essential to have a valid and legal deed. You may also be surprised to know that a deed does not have to be executed for consideration. A consideration is the benefit that the Grantee and the Grantor would both gain from the transfer of deed. In most real estate cases, this usually means that money is given in exchange for the property. However, it should be noted that a consideration is useful in protecting your rights as a Grantee, should a third party dispute the legality of your ownership due to a Grantor’s debt or other legal misfortunes. Finally, deeds are not required to be acknowledged or recorded, although it is a good idea to acknowledge and record every real estate transfer.
Types of Deeds in California
Grant Deed – The grant deed makes two guarantees from the Grantor to the Grantee. The first guarantee is that the Grantor has not already sold the property to anybody else. The second guarantee is that there are no liens or restrictions on the property that have not already been disclosed to the Grantee by the Grantor. In essence, the grant deed is ensuring that no third parties could have any claim to the property.
Quitclaim Deed – This deed is also known as a nonwarranty deed. With this type of deed, the Grantor is transferring only whatever interest he/she has in the property at that time, if any. Unlike the grant deed, when using a quitclaim deed, the Grantor is not guaranteeing that there are not any issues, liens or restrictions on the property. If there happens to be no issues with title, the quitclaim deed will essentially offer the same protection as a grant deed. However, if there are problems with title, the quitclaim deed will not protect the Grantee and he/she will have no legal recourse against the Grantor.
Warranty Deed – This type of deed guarantees that the Grantee is obtaining a clear title. You may find that the warranty deed is not commonly used in California, as a lot of consumers are using title insurance which basically gives you the same guarantee.
Trust Deed – Also known as a deed of trust, this type of deed involves three different parties; a Trustor, a Beneficiary, and a Trustee. In a common example, the Trustor is the party that is borrowing money from the Beneficiary. The Trustee is a third party who will hold legal title to the property. If the Trustor does not fulfill her/her agreed upon obligations, the Trustee has the power to sell the property for the Beneficiary. Also, if the agreed upon obligations are fulfilled by the Trustor, the Trustee then has the power to provide legal title to the Trustor.
Sheriff’s Deed – This type of deed is used in foreclosure cases and is given to the party that purchases the foreclosure. Unlike the grant deed, the sheriff’s deed does not necessarily guarantee a clean title.
Gift Deed – This type of deed is used to convey title from one party to another without being executed for consideration. However, if it is found that a gift deed was used to defraud creditors on the part of the Grantor, or commit any other type of fraud, the gift deed may be found to be invalid.
Void Deeds – There are specific instances where deeds are null and void. While these instances may be uncommon, it may be a good idea to be aware of them:
- If the Grantor has previously been determined to be legally incapable of making their own decisions
- Any deeds that were forged or has forged signatures
- A deed from a person that is under 18 years of age and is not emancipated
- A deed that has been executed where the name of a Grantee was inserted without the consent of the Grantor
- A deed that was written with the only intent of being executed after the Grantor’s death