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Posts Tagged ‘personal representative’s deed’

A deed is the legal document that transfers ownership rights (called “Title”) from one owner to the next. There are many different kinds of deeds in Wisconsin, and the type of deed used has important legal ramifications. A clear understanding of the different kinds of deeds also illuminates why title insurance is so critical.

What Deeds Do

A deed transfers an interest in property from one party to another. In addition, a deed may contain other important language that can affect the new owner, including among others, warranties and reservation of rights.

Warranties

A deed may contain certain warranties or promises. Warranties are the Seller’s promise to the Buyer regarding the title interest that the buyer will receive. The standard Warranty Deed contains the following warranty:

Grantor warrants that the title to the Property is good, indefeasible in fee simple and free and clear of encumbrances…

Thus, a Warranty Deed offers a legal promise that the buyer will receive good title. By contrast, a Quit Claim Deed contains no warranties at all. Other deeds may have limited warranties.

Reservation of Rights

Deeds may also contain reservations of rights. For instance, a deed may reserve interest or rights in the seller or grantor, such as a life estate. A deed might also contain provisions for easements or other restrictions. In other words, deeds may contain limitations on the rights the new owner will receive.

Various Types of Deeds

There are many different types of deeds, including Warranty Deeds, Quit Claim Deeds, Trustees Deeds, Sheriff’s Deeds, and Personal Representative Deeds. The major difference between each kind of deed is the level of warranties provided.

Type of Deed

When Used

Warranties

Warranty Deed In most standard sales. Warrants good, indefeasible title in fees simple, free and clear of encumbrances. This is the strongest warranty and generally gives the new owner the right to seek redress or damages from the seller in the event of most title problems.
Quit Claim Deed Many inter-family transaction, between neighbors, divorce Contains no warranties at all. A seller conveys, and the buyer receives, whatever interest the seller has in the property, even if that interest is nothing at all.
Sheriff’s Deed Sale at the end of Foreclosure Like a Quit Claim deed, there are no warranties. The Buyer gets whatever interest the sheriff was able to convey (which could be nothing at all).
Personal Representative’s Deed Used to transfer property rights from a deceased person’s estate. Involves Probate Court. Like a Quit Claim deed, there are no warranties. Generally, the Personal Representative is unwilling to warrant or promise anything relating to property that he/she has never personally owned.
Special Warranty Deed REO (Bank Owned) Sale Provides very limited warranties. Generally only warrants that the Bank had title sufficient to sell the property.

 

Title Insurance and Deeds

A title insurance policy insures that the new owner will receive good, indefeasible title, free and clear of encumbrances other than exceptions noted in the policy. You may notice that this is almost exactly what a seller Warrants in a warranty deed. Title insurance can be viewed as an insurance policy in the event that a seller breaches a warranty and is unable to pay. And, after all, how many sellers could come up with the kind of money needed to pay for a breach of a warranty?

But what if the seller gave no warranties at all? What if the deed is a Quit Claim Deed, a Sheriff’s Deed, or a Personal Representative’s deed. Then title insurance becomes even more critical. The Title policy would be the buyer’s only recourse in the event of a title defect.

Title Insurance policies always protect buyers against certain unforeseen title problems. This is often added protection above and beyond the buyer’s right to seek redress from the seller. Whenever the buyer has no right to seek redress from the seller – when there are no warranties – it becomes imperative that the buyer receive a title insurance policy.

Giving Legal Advice

This information is intended to serve as a warning to Realtors and other non-attorneys to steer clear of giving legal advice. It is important to understand the characteristics and limitations of each kind of deed. It is even more important to leave the legal advice to attorneys. If a question or issue arises involving which type of deed is appropriate, always consult an attorney.

This information was provided by Attorney Peter Zarov. The information provided is not to be construed or used as legal advice and may not be accurate outside of Wisconsin.

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