If you’re buying a new home, it’s important to know what kind of deed comes with it. Many people think that the title is the same thing as a deed. Although the terms are often used in tandem, they’re very different things.
A title is simply a legal concept that indicates who owns a property. When you buy a home or other property, you “assume title” or “take title” to it. A deed is an actual legal document signed by the seller and buyer that confirms the new ownership. The following are the two most common kinds of deeds.
General warranty deed
This is the deed you’ll most likely get when you purchase a new home. It’s a guarantee that a party has a right to sell the home and that the property is free of liens (claims against the property). It further guarantees that if the buyer later discovers a lien that the seller didn’t disclose (or maybe even know about), the seller is responsible for taking care of it.
Special warranty deed
The guarantee offered by a special warranty deed isn’t as all-encompassing as that of a general warranty deed. It guarantees that there aren’t any liens on it from the period during which the seller owned the property. However, if a lien is discovered that was placed on the property prior to that, a buyer will likely be responsible for resolving it. You’re most likely to have a special warranty deed if you’re buying a bank-owned or foreclosure property.
There are a number of types of deeds that provide various levels of protection against having to pay off or otherwise resolve liens on a new home or other property. It’s crucial to know what kind of deed comes with a property you’re interested in buying. It’s also a good idea to do a thorough search for liens before you make your final decision – especially if you’re interested in an older property that’s had multiple owners. This is just one reason why it’s a good idea to have experienced legal as well as real estate guidance when purchasing any property.