Deed

A deed is a legal instrument used to grant a right. The deed is best known as the method of transferring title to real estate from one person to another, often using a description of its "metes and bounds." However, by the general definition, powers of attorney, commissions, patents, and even diplomas conferring academic degrees are also deeds.

Historically under common law, for an instrument to be a valid deed it needed five things:

  • 1. It must indicate that the instrument itself conveys some privilege or thing to someone. This is indicated by using the word hereby or the phrase by these presents in the sentence indicating the gift.
  • 2. The grantor must have the legal ability to grant the thing or privilege.
  • 3. The person receiving the privilege or thing must have the legal capacity to receive it.
  • 4. A seal must be affixed to it. Most jurisdictions have eliminated this requirement and replaced it with the signature of the grantor. However, for conveyances of real estate, most jurisdictions require that the deed be acknowledged before a notary public or a civil law notary and some may require a witness or witnesses in addition.
  • 5. It must be delivered to and accepted by the recipient.

Conditions attached to the acceptance of a deed are known as covenants.

In the transfer of real estate, a deed conveys ownership from the old owner (the grantor) to the new owner (the grantee), and can include various warranties. The precise name of these warranties differ by jurisdiction. However the basic difference between them is the degree to which the grantor warrants the title. The grantor may give a general warranty of title against any claims, or the warranty may be limited only to claims which occurred after the grantor obtained the real estate. The latter type of deed is usually known as a special warranty deed. While a general warranty deed is normally used for residential real estate sales and transfers, special warranty deeds are more commonly used in commercial transactions. A third type of deed, known as a bargain and sale deed, implies that the grantor has the right to convey title but makes no warranties against encumbrances. This type of deed is most commonly used by court officials or fiduciaries that hold the property by force of law rather than title, such as properties seized for unpaid taxes and sold at sheriff’s sale. A so-called quitclaim deed is (in most states) actually not a deed at all--it is actually an estoppel disclaiming rights of the person signing it to property.

In most parts of the United States, deeds must be submitted to the Recorder of deeds, who acts as a cadastre, to be registered. An unrecorded deed may be valid proof of ownership between the parties, but may have no effect upon third-party claims until disclosed or recorded. A local statute may prescribe a period beyond which unrecorded deeds become void as to third-parties, at least as to intervening acts.

In some jurisdictions, a deed of trust is used as an equivalent to a mortgage. A trust deed isnt like the other types of deeds; its not used to transfer property directly. It is commonly used in some states (California, for example) to transfer title to land to a "trustee,&qout; usually a trust or title company, which holds the title as security ("in escrow") for a loan. When the loan is paid off, title is transferred to the borrower by recording a release of the obligation and the trustee’s contingent ownership is extinguished. Otherwise (upon default), the trustee will liquidate the property (with a new deed) and offset the lender’s loss with the proceeds.

Ownership transfer may also be crafted within deeds to pass by demise, as where a property is held in concurrent estate such as "joint tenants with right of survivorship" (JTWROS), "tenants by the entirety", or as a life estate. In each case, the title to the property immediately and automatically vests in the named survivor(s) upon the death of the other tenant(s).