A deed is a written legal document by which ownership of real property is conveyed from one party to another. It must contain five essential elements in order to actually convey the ownership of the land from one party to another:
- First, the deed must identify the grantor (seller) and the grantee or (buyer). The actual act of conveying ownership is known as a grant.
- Second, the deed must state the consideration (money), was given by the buyer to the seller.
- Third, the deed must contain words of conveyance which clearly states that the seller is making a grant of real property to the buyer.
- Fourth, a legal description of the boundaries and the exact location of the land is required.
- Lastly, the seller executed the deed by signing it and transferring the ownership over to the buyer.
In order for the deed to take affect, there must be delivery and acceptance. The seller delivers the deed to the buyer at closing and then to ensure that a record of the transfer of ownership has taken place, the deed is recorded with the local government as evidence of the change in ownership.
There are several types of deeds. The one most commonly used and considered to be the best deed a buyer can receive is known as a warranty deed. It contains all of the five elements referenced above. It also warrants that there are no liens or other encumbrances on the property other than property taxes or municipal assessments. Unfortunately, as a result of the high level of foreclosures, buyers of foreclosed properties will receive a sheriff’s deed. It conveys the foreclosed party’s title and warrants that the sheriff has not damaged the property’s title.
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Information courtesy of Charles J. Jacobus & Bruce Harwood authors of Real Estate Principles.