Q: Marsha, I’m about to close escrow on my first house. I’ve been asked how I want to take title of my new home. What does that mean? Also, I keep hearing about grant deeds, title deeds, and even quit-claim deeds. How many different types of deeds are there?
A: I understand your confusion. It’s befuddling. In addition to the deeds you mentioned, there are also correction, gift, warranty, grant deeds for life estate, deeds of reconveyance, inter-spousal transfer grant deeds, deed in lieu of foreclosure, and more.
The most common deeds are grant and quit-claim deeds, so I’ll briefly explain these. Remember for advice about your specific situation, speak with your real estate attorney.
First, let me clarify that property deeds and title are not the same thing. You hear these terms tossed around and they seem to be talking about similar concepts, but in real estate, title does not refer to an actual deed. Title designates your bundle of rights and ownership in a piece of real estate. It may be partial or complete ownership. The grant deed is the document that is recorded when ownership is transferred to another party. It is the public notice of this transfer. To sum up, title is your bundle of rights and interest in a property, and the grant deed is the document that transfers one party’s rights to another.
The quit-claim deed is used to relinquish whatever interest the grantor has in a property. This commonly occurs between spouses or family when property is gifted, divided, or given away without selling it.
Here is a true story, from a fellow Realtor, which involved all these elements: title, grant deed, and a quit-claim deed. About 40 years ago, there was a Santa Barbara housekeeper who had saved and scrimped for the down payment to purchase her own home. Fearing she wouldn’t qualify for the loan, she asked her employer to obtain the loan, and he purchased the house with her down payment money.
She didn’t understand the process. Her employer purchased the house, he had the loan, and he was on title; legally, it was his house. She paid the taxes and the mortgage and did all the repairs and maintenance. The housekeeper lived there for years, believing she owned the house. The employer knew better. Suddenly, he became seriously ill. He had a deep pang of conscience and wanted to correct the situation with his housekeeper. He asked a real estate agent to arrange a quit-claim deed, in which relinquished all his rights and interest to the housekeeper’s home. He didn’t own the property anymore.
He recovered from his illness and deeply regretted his moment of conscience. He sued the real estate agent who had assisted with the quit-claim deed and demanded the house back. He lost his case, and his housekeeper finally had the home legally put in her name. She was on the title, and the grant deed was recorded in her name.
These things are important to keep straight. I hope the terms are clearer for you now. Good luck with your new home.
Marsha Gray, DRE #012102130, NMLS#1982164, has been a real estate broker in Santa Barbara for more than 20 years. She works at Allyn & Associates, real estate services and lending. To read more Q&A articles, visit marshagraysbhomes.com. She will research and answer all questions submitted. Contact Marsha at (805) 252-7093 or firstname.lastname@example.org.