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The 3 Common Deed Types in Title Insurance: What are they?
Let’s explore how people use the three common deed types in title insurance.
So, you may think a deed is a deed, right? Nope! There are different types of deeds and they all do different things. Some differences may be subtle, but others can hugely impact how property is transferred and how title is held.
What We’ll Be Talking About
To start, let’s introduce the 3 types of deeds we’ll be talking about. Keep in mind, though, there are many more types of deeds out there. Still, here are the three that we will be talking about.
- Warranty Deeds
- Quit Claim Deeds
- Deeds of Trust
Now that we’ve established the types we will discuss, let’s get started!
Common Deed Type No. 1: Warranty Deeds
Firstly, we use a warranty deed as the first of our common deed types to transfer title. It gives the best protection for grantees. Why? It guarantees that the title is good! Essentially, the seller is promising the buyer that the seller will defend any claims made by outside parties.
How A Warranty Deed Is Used
Warranty deeds have the most complete protection for buyers of all our deed types listed here. A good reason explains why people commonly use this deed here! Warranty deeds usually have certain information included in them, such as the following:
- Shows sale price of property
- Lists the names of the seller and the buyer
- Shows the municipality and county where the property is located
- Indicates the signature of the parties
- Required to have a notary acknowledgement
Common Deed Type No. 2: Quit Claim Deeds
Secondly, people usually use a quit claim, or quitclaim, deed for transfers that do not involve a sale. Here, the seller transfers ownership to the buyer without any warranties or guarantees that the title is good on the property. Nothing will show that property is free from liens, too.
How A Quit Claim Deed is Used
People mostly use quit claim deeds for transfers between spouses. They usually use them to transfer property during a divorce settlement. People also use quit claim deeds for other transfers between family members.
Common Deed Type No. 3: Deed of Trust
Thirdly, a deed of trust is almost like a mortgage, but there are differences. Many states actually call mortgages deeds of trust, too, so the term may be confusing. You also may see this type called a trust deed, too.
How a Deed of Trust is Used
People use deeds of trust when they use property as collateral for a loan. Since this is the probably the hardest deed type to understand, we’ll explain how it works in steps.
- Firstly, a trustee, who may be part of a trust or even a title company, transfers title to hold the property and secure the loan.
- Next, when the borrower pays off the loan in full, they receive full transfer of the title.
- Keep in mind that if the borrower defaults on the loan, the trustee can sell the property.
Conclusion
Lastly, these three are only some of the common deed types people use in title insurance. There are quite a few out there! If you have any questions about your deed, we encourage you to contact whoever prepared the deed to your home. Oh, and if we handled yours or you want to sell property, contact us at 717-293-9760 to get started!
Thank you for reading!
Again, thank you for reading our blog post about common deed types. We hope you learned something, too! Keep your eyes peeled for our next post soon.