Deeds

What is a Deed?

A real estate “deed” is a document that adds, removes, or changes a name on a property title. There are many different form types such as Grant Deeds, Quitclaim Deeds and Warranty Deeds. Each form contains minor differences. Some forms provide no warranties while others provide limited or full warranties, but all deeds will serve its main function of transferring title. Regardless of the form type, every deed should serve its main purpose, which is transferring title.

Common Transfer Types

A deed can be used for several types of transfers. My Legal Depot specializes in deeds for various property types, including, but not limited to, residential properties, commercial properties, vacant lots, and timeshares. Below is a list of the most common transfers that we specialize in.

• Adding or Removing a name on the title.
• Adding a Joint Tenant to the property to avoid Probate.
• Transferring the property to any individual. The deed transfer can be the sale of a property or a Gift with no consideration involved.
• Transferring a property into a legal entity such as a Corporation or LLC.
• Transferring title into a Living Trust to avoid probate.
• Transferring property out of a Living Trust once the trustors/trustees have passed away.
• Changing a name due to a legal name change or correcting a misspelled name on title.
• Changing or converting the title vesting (i.e. from tenants in common to joint tenancy).
• Transferring the property title pursuant to a Divorce.
• Transferring the property title pursuant to a lawsuit or court order.
• Transferring the property in order to establish the sole and separate property of a spouse.

A vesting is a method of holding title to your real estate. A vesting is usually required every time you file a deed. Each vesting is unique and has both positives and negatives. Some allow the owners to avoid probate and others do not. Below is a brief overview of the most common vestings.

• Sole Ownership (Probate required if owner passes away)

When property is owned by only one person it is considered as sole ownership. No special vesting or indication on the deed is necessary. If the sole owner passes away the property must be probated in order for the heirs to inherit the property. Click Here for Examples

Probate is a special court that supervises and determines how a deceased person’s estate is to be distributed. The probate procedure should be processed by an attorney and may take years to complete. Probate can become an expensive and time consuming process that can be avoided by creating a Living Trust, adding a Joint Tenant, or creating a Beneficiary Deed. The beneficiary deed is only available in some states.

• Joint Tenancy – Must have at least two (2) owners (No Probate if owner passes away)

Joint tenancy requires two (2) or more owners and all owners must take ownership in equal percentages. An advantage of joint tenancy is avoiding the costly and time consuming probate court process in case a joint owner dies. Once a joint tenant passes, the ownership is divided equally to the surviving owner(s). A joint tenant cannot will his ownership since it is automatically distributed to the surviving owner(s). However, a joint tenant still has the right to sell his/her interest. Joint tenancy is the most common and popular choice for a vesting. Click Here for Examples

• Living Trust (No Probate if owner passes away)

This vesting can only be chosen if you are transferring your property into your living trust. A living trust is an estate planning tool that provides instructions on how the property will be transferred upon death.

The major benefit of a living trust is that it will avoid the probate process. An owner must transfer his/her property into the living trust in order for the trust to take effect. Click Here for Examples

• Community Property with Right of Survivorship (No Probate if owner passes away)

Community property refers to all property owned by husband and wife during their marriage. This vesting is specifically reserved for property owned by husband and wife.

In the event of a death, the Community Property with Right of Survivorship vesting will automatically transfer the property to the surviving spouse without probate. This vesting is only available in California, Nevada, Arizona, Alaska, Texas and Wisconsin. (Not intended to be a complete list; Laws are subject to change)

Note: Since there is right of survivorship, the property cannot be willed to anyone else. Upon death the property will automatically belong to the surviving spouse. Click Here for Examples

• Community Property (Probate required)

Community property refers to all property owned by husband and wife during their marriage. This vesting is specifically reserved for property owned by husband and wife.

Property held in this manner may need to go through probate process in the event of death because there is no right of survivorship clause. In California, you may be able to use the Spousal Property Petition or Affidavit of Right of Surviving Spouse per Probate Code Section 13540 to clear title. Click Here for Examples

• Tenants in Common – Must have at least two (2) owners (Probate required)

A tenant in common occurs when two (2) or more people own property jointly and have the right to will or sell it. Tenants in common can have equal or unequal percentages of ownership.

Tenants in common do not have right of survivorship. In case of an owner’s death, the property will need to go through the probate process. This could be a major drawback since probate can be very costly and take months to years to complete. Click Here for Examples

There are different types of deeds available depending on the state your property is located. Each of the deeds listed below can be used to transfer or change title but contains important differences. Regardless of the form type, every deed should serve its main function, which is transferring title. Below is a brief overview of the most common deed types.

• Grant Deed – (Commonly used in California)

In a Grant Deed the transferor usually provides two warranties: (1) The transferor warrants that he/she has not previously transferred the property to someone else, and (2) at the time of transfer, the property being transferred is free from encumbrances done, made, or suffered by the transferor. (Warranties are created by local statutes and may vary from state to state - please check your local laws)

• Grant Bargain Sale Deed – (Commonly used in Nevada)

In a Grant Bargain Sale Deed the transferor usually provides two warranties: (1) The transferor warrants that he/she has not previously transferred the property to someone else, and (2) at the time of transfer, the property being transferred is free from encumbrances done, made, or suffered by the transferor. (Warranties are created by local statutes and may vary from state to state - please check your local laws)

• Quitclaim Deed – Common in most states

In a Quitclaim Deed the transferor provides no warranties at all. The transferor in a Quitclaim Deed transfers all actual and potential ownership to the transferee.

This form is typically used to establish sole and separate property of a spouse or to transfer property pursuant to a divorce. For example, a lender will normally ask a spouse to sign a Quitclaim Deed to transfer marital property ownership to the other spouse. This transfer includes actual ownership and/or potential marital property ownership.

A Quitclaim Deed is also used when there is a “cloud” on the property title. For example, if a title search reveals that the owner's spouse or heirs may have potential ownership in the property, a Quitclaim Deed can be filed in order to transfer any potential ownership that they may have. The property title may not explicitly show their names as an owner, but under state law they could have some ownership. To be safe, a Quitclaim Deed could be used to transfer any potential ownership to ensure that there is no “cloud” against the title.

The Quitclaim Deed can be used for all types of transfers but is frequently used for interspousal transfers and to remove “clouds” from the property title. (Warranties are created by local statutes and may vary from state to state - please check your local laws)

• General Warranty Deed – Common in some states

In a General Warranty Deed the transferor typically warrants that he/she actually owns the property, there are no encumbrances against the property, the purchaser will have quiet enjoyment and use of the property, and the transferor will defend the title from any person who makes a lawful claim. (Warranties are created by local statutes and may vary from state to state - please check your local laws)

• Special Warranty Deed – Common in some states (Commonly used in Arizona)

In a Special Warranty Deed the transferor usually provides the same warranties as a General Warranty deed, but instead of defending the title from any person who makes a claim, the transferor will only defend lawful claims arising from events that occured during the timeframe that the transferor owned the property. Therefore, this will reduce the transferor's liabilities from potential claims. (Warranties are created by local statutes and may vary from state to state - please check your local laws)

Probate is a special court that supervises and determines how a deceased person's estate is to be distributed. Probate can become a lengthy and complex court procedure that typically requires an attorney. Since probate usually comes with expensive attorney fees and long waiting periods, it may be wise to avoid probating an estate.

Despite the common misconception, a will does not avoid probate. A will only serves as instructions to a probate court on how the assets of a deceased person are to be distributed. Probate is still required to supervise the distribution of the assets. Below is a chart that briefly outlines the advantages and disadvantages of the legal vestings that avoid probate.