real estate title deed

Types of Deeds in New York State

In order to be a successful landlord or real estate investor, you need to take a look at the minute details in each transaction. Even when everything else about a deal checks out, it’s possible for a seemingly trivial detail to cause issues in the future.

When purchasing or selling property, it’s imperative to pay attention to the type of deed that the property is being transferred under. It may seem insignificant, but the type of deed you use in any transaction has tremendous and permanent implications. Here, we’ll discuss the types of deeds most commonly used in New York State.


What is a Real Estate Deed?

Real estate deeds are legal documents that are used to transfer ownership of real property. This includes the land, its improvements (such as a house or buildings), and attachments.

Words used to effectuate the conveyance of property may be grant, assign, convey or warrant. However, they all basically do the same thing: transferring the interest of the person or entity selling the property to the person or entity buying the property.

Deeds are recorded at the county or city recorder’s office. They become a matter of public record, putting the world on notice of the ownership of the property.

Additionally, anyone can go to the local recorder’s office and view a copy of the most current deed for a property. They can also view the prior deeds for a particular property.


Bargain and Sale Deed

This form of deed is most commonly used in downstate real estate transactions (i.e. New York City, surrounding suburbs and Long Island). The recipient of a bargain and sale deed is acquiring real property without knowing if there are any encumbrances on it, unless stated in the deed. The grantor of the deed only guarantees that the grantor has title, and does not guarantee that the title is free of defects. This form of deed implies that the grantor holds title to the property. However, the deed does not warrant against any encumbrances.

Since a bargain and sale deed does not warrant good title from the grantor, the grantee could be in trouble if title defects appear at a later date. However, for purchasers who are looking to avoid potential issues, there are workarounds. The most common workaround is for the buyer to purchase a title insurance policy, which does warrant good title. The combination of a bargain and sale deed and owner’s policy of title insurance usually is sufficient to give a buyer reasonable comfort that it is acquiring good title to a property. It also serves to shifts some of the risk of delivering good title from the seller to the title insurer.

Bargain and sale deeds can include covenants against grantor’s acts. This is a promise within the deed instrument by the seller that it has not done any act which would encumber the title it seeks to convey. In other instances, the bargain and sale deed might not contain such a covenant. This transfers more of the risk of the delivery of good title to the title insurer.


Warranty Deeds

Warranty deeds are customarily used in upstate New York real estate transactions, but can be used anywhere in New York State. They contain three main guarantees that the:

  • Grantor has not sold the property to anyone else
  • Property is not burdened by any encumbrances apart from those the seller has already told the buyer about
  • Grantor will warrant and defend title against the claims of all persons

This means the seller is guaranteeing the grantee that title is free of any defects that may affect the title to the real property being transferred, even if the defect was caused by a prior owner.


Quitclaim Deeds

Quitclaim Deeds are used to convey any interest that the grantor might possess in the property. They are sometimes erroneously referred to as “quickclaim” or “quick claim” deeds. The grantor might be the legal owner. Or, the grantor might never have formally been identified on a deed describing the property.

Through a quitclaim deed, the grantor is essentially disclaiming and turning over its interest (without necessarily defining what that interest, if any might be) to a grantee. Quitclaim deeds are often used during a divorce or estate administration. This is because it is the most efficient way to deed the property from one spouse or beneficiary to another.

If a married person or beneficiary of an estate holds title to a property as sole and separate or perhaps he or she acquired the property before marriage or death of a decedent, the spouse or beneficiary not in title might be asked to sign a quitclaim deed when the property is sold to a third party. This is to make sure the spouse or beneficiary who was not on the deed does not later come back and lay claim to the property.


Other Types of Deeds

Tax Deed: When property taxes are unpaid (the numbers of delinquent years vary from state to state), and the property is sold for the payment of back taxes; typically a tax deed is used to convey title to the buyer.

Deed-in-lieu of Foreclosure: Sellers who are behind in payments will sometimes negotiate with a lender to accept a Deed-in-Lieu of Foreclosure; This means that the seller has deeded the property to the lender to avoid foreclosure.


Real Estate Lawyer for Deed Transactions

Understanding what each type of deed can do and the strengths and limitations of each is crucial. In real estate, deeds are often permanent, so it pays to be exceedingly careful and get and it right. Deeds raise the most basic issues of ownership, but the way they work and what they mean is complex and lasting. As an experienced real estate attorney, Jim Clark can help you to strategically approach each deed transaction with these considerations in mind.