The deed is an essential part of the conveyance process, which entails everything involved in closing a deal—from establishing a sale price and closing date to conducting a title search and filing the deed.
On your deed, you’ll see the terms grantor—which means the selling or transferring party—and grantee, or the person buying or taking claim of the property.
There are several deed classifications, which affect how much protection the buyer receives and which legally binding guarantees—called warranties and covenants—are included when ownership is transferred.
The covenants that cover present-day guarantees are:
- Covenant of right to convey: The owner holds a valid, legal title and can transfer it.
- Covenant of seisin: The owner has legal right to convey the property.
- Covenant of encumbrances: The title has no encumbrances other than what is already stated on the deed. Encumbrances can be financial in nature, such as liens, or non-financial, such as easements).
- Covenant of warranty: The grantor will protect the grantee against any party that may challenge the title or place an encumbrance on it.
- Covenant of quiet enjoyment: The grantee will not be removed from the property because of a defective title.
- Covenant of future assurances: The grantor will take proactive steps to fix any title issues.
- Estate sales and transfers, when the grantee has a high degree of familiarity with the grantor and is often family. In many situations, the transaction is often done between a will executor and a trust manager, and neither party will be claiming the property.
- Foreclosure sales, when a buyer is purchasing property from a bank or mortgage lender after foreclosure.
- Tax deeds
- Deeds in lieu of foreclosure
- Sheriff’s deeds
- Executor’s deeds
- Administrator’s deeds.
When the deed of trust is signed, the trustee receives a conditional title or a lien on the property from the borrower. The trustee then acts as an agent on behalf of the lender, and the lender is named as the beneficiary on the deed of trust. If the borrower defaults on a deed of trust, the lender can immediately foreclose on the property due to the deed’s power-of-sale clause. This grants the lender the right to have the trustee put the property up for sale without a court order.
So long as the borrower is current on their payments, they still retain a full equitable interest in the property. Deeds of trust are used in lieu of mortgages in many U.S. states, including California, Colorado, Virginia, Texas, Maryland, Tennessee, and Oregon.
Typically, official deeds involve a lien or claim on the property or property owner for back taxes, and the court takes possession via force of law.
Keep in mind that each state has small differences in their legal requirements for deeds—but these core elements are common among all.
Every deed has a title component, which is why real estate buyers generally get title insurance. Title insurance tasks a third party with looking up any liens or outside claims that may exist on the property. It’s not foolproof, but protects the vast majority of defects that may occur—like a long-lost relative claiming ownership.
For an automobile, RV, or trailer, a title alone is enough to convey ownership.
A home warranty covers the repair and replacement of appliances and home systems, such as water heaters, plumbing, and HVAC.