Call us for your next real estate closing 770-924-1400  •  400 Creekstone Ridge, Woodstock, GA 30188

In real estate, deeds are crucial in transferring property ownership from one party to another. Black’s Law Dictionary defines a deed as “A conveyance of realty; a writing signed by the grantor, whereby title to realty is transferred from one to another…A written instrument, signed and delivered, by which one person conveys land to another.”

Understanding the different types of deeds is not just helpful, but it’s empowering for buyers and sellers, giving them the knowledge they need to navigate their transactions confidently. 

Below, we’ll explore the most common types of deeds used in real estate practice, highlighting their unique characteristics and uses. 

Warranty Deeds

A warranty deed is a most common and secure property transfer form. With this type of deed, the seller (or grantor) guarantees that the property is free from any encumbrances or defects in the title, both during their ownership and in the property’s history. This comprehensive guarantee provides the buyer (or grantee) with the highest level of protection.

When a warranty deed is issued, the seller makes several key promises:

  1. They own the property and have the legal right to transfer it.
  2. The property is free from liens or claims unless explicitly stated.
  3. They will defend the buyer against any claims that arise due to title issues.

Because of these assurances, warranty deeds are often used in traditional real estate transactions, particularly when a lender is involved.

Limited Warranty Deeds

A limited warranty deed, sometimes called a special warranty deed, offers a narrower scope of protection than a full one. Here, the seller guarantees that they have not done anything to encumber the title during their period of ownership but makes no promises about the property’s title before they acquired it.

While they provide some assurance to the buyer, they’re not as comprehensive as a full warranty deed. This means the buyer may not be fully protected against title issues before the seller’s ownership period.

Quitclaim Deeds

A quitclaim deed is often used when the property transfer doesn’t involve a traditional sale. With this deed, the seller makes no guarantees about the title’s validity or freedom from encumbrances. Instead, they transfer whatever interest they may have in the property—if any—to the buyer.

Quitclaim deeds are commonly used in situations such as:

  • Transferring property between family members
  • Correcting errors in a property’s title
  • Resolving title disputes

It’s important to note that while a quitclaim deed is quick and straightforward, it offers no protection to the buyer if title issues arise later. This means that the buyer could potentially face legal and financial challenges if the property’s title is found to be invalid or encumbered.

Transfer on Death Deeds

A transfer on death (TOD) deed is a unique legal instrument that allows property owners to name a beneficiary who will inherit the property upon their death. This type of deed is beneficial for estate planning, as it allows property to pass outside of probate.

A TOD deed offers several advantages:

  • It ensures a smooth transition of property ownership.
  • The property owner retains complete control and ownership during their lifetime.
  • It’s relatively simple to execute and revoke if circumstances change.

However, it’s important to understand state laws governing TOD deeds, as they are not universally recognized.

Life Estate Deeds

A life estate deed grants ownership of a property to an individual (known as the life tenant) for the duration of their lifetime. Upon their death, ownership automatically transfers to a designated remainderman without the need for probate.

Life estate deeds are often used as part of estate planning to:

  • Ensure that a specific individual can live in the property for their lifetime.
  • Avoid potential disputes among heirs.
  • Streamline the transfer of ownership upon the life tenant’s passing.

While life estate deeds can be effective, they can also complicate property sales or refinancing during the life tenant’s lifetime.

Security Deeds

In some states, particularly Georgia, security deeds are the primary instrument used to secure a loan with real property. Unlike a mortgage, which creates a lien on the property, a security deed actually transfers title to the lender as collateral for the loan. Once the loan is paid in full, the lender releases the deed back to the borrower.

Security deeds provide lenders with a high level of protection, as they can expedite foreclosure proceedings in the event of default. Borrowers should carefully review the terms of their security deed to understand their obligations.

First Mortgages

A first mortgage refers to the primary loan used to purchase a property. It has priority over other claims or liens, meaning the lender holding the first mortgage is first in line to be repaid in the event of foreclosure.

First mortgages are typically secured by a deed of trust or a mortgage, depending on state law. These documents outline the borrower’s obligations and the lender’s rights, including the ability to foreclose if the borrower defaults.

HELOCs (Home Equity Lines of Credit)

A home equity line of credit (HELOC) allows homeowners to borrow against the equity they’ve built in their property. Unlike a traditional loan, a HELOC functions as a revolving line of credit, meaning borrowers can draw funds as needed, up to a predetermined limit.

The property secures HELOCs and are typically subordinate to the first mortgage. This means that the first mortgage is paid off before any funds are allocated to the HELOC lender in the event of foreclosure.

While HELOCs can be a flexible financial tool, homeowners should use them responsibly to avoid jeopardizing their property.

Work with a Trusted Real Estate Attorney

Each type of deed serves a distinct purpose in real estate transactions, from providing comprehensive title guarantees to facilitating estate planning and securing loans. Understanding the differences between these deeds can help you make informed decisions, whether you’re buying, selling, or managing property.

The team at Frank B. Pallotta Law is always here to help you navigate the complexities of real estate transactions. If you have questions about deeds or any other aspect of property law, don’t hesitate to contact us. We’re here to provide personalized guidance and support, ensuring you feel reassured and confident in your decisions.