What Kind of Deed Do You Have? Part I

Deeds are the instruments used when property is transferred from one owner to another in California. Deeds include the name(s) of the buyer and seller and a legal description of the property, among other information, and it’s best if they are  recorded in the county where the property is located so the title (ownership) to the property can be verified. An unrecorded deed is valid, but the property can be sold out from under you if no one knows you have that deed. So, always record your deeds.

The type of deed you have can affect when and how you can sell and/or finance your property—so it’s worth understanding what type of deed you’ve got. Here’s a quick rundown.

Grant Deed

Almost everyone who owns property in California has a grant deed. These deeds are most commonly used to transfer interest in real estate from one party to another. Lenders like grant deeds because lenders are risk-averse and with a grant deed, they can easily assess who has a legitimate claim of ownership on the property.

Quit-Claim Deed

A quit-claim deed is completely different. It is most commonly used to clean up the title to a property. It’s basically a way for someone to relinquish any claim they may have to a property. The person who signs a quit-claim deed is not representing that they have any ownership, only that they might—and if they do, they’re giving it up.

The most common use for a quit-claim deed is an interspousal quit-claim deed, and it is used in two situations: first, when a married person acquires property that will remain outside the marriage and not become joint property. Let’s say a married couple divides their wealth three ways: some assets belong to one spouse, some to the other, and some are held jointly. If one spouse chooses to purchase property that will not be held jointly, the other spouse can sign an interspousal quit-claim deed, so the legal title is clear. The second time interspousal quit-claim deeds are often used is in the case of divorce, when property that was previously held jointly is divided up. If the couple owns two properties, for example, each one can sign an interspousal quit-claim deed to give up interest in the property that goes to the other party.

Quit-claim deeds are not reserved for agreements between spouses. They can be used anytime someone gives up a claim of ownership. For example, if documents were not recorded properly, a previous owner can sign a quit-claim deed relinquishing ownership. Or sometimes to clean up title, heirs of past owners need to legally state they do not claim any right to a property.

Next week, I’ll share more types of deeds, some of which occur under less amicable situations. In any case, if you are dealing with anything other than a straightforward grant deed, I recommend hiring a knowledgeable real estate lawyer. Your Realtor can refer one to you. Real estate law can get complicated in a hurry. Best to have an expert on your side.

If you’d like to discuss these or any other real estate matters, feel free to get in touch. You can reach me at rselzer@selzerrealty.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.

Dick Selzer is a real estate broker who has been in the business for more than 40 years.

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