Whether you are contemplating selling or purchasing a property in Massachusetts for the first time, it can help to learn about the difference between the main types of deeds available in the state. This article aims to provide information about warranty and quitclaim deeds, the pros and cons of each type and which type you are likely to find most prevalent when you are involved in a real estate transaction.
What exactly are deeds, anyway?
Deeds are documents that indicate ownership of a particular property. Deeds are typically created and then delivered by the previous owner of the property, called the grantor, to the new owner, or grantee. However, it is not quite as simple as that. The deed the grantor originally held will not be the same when the property that person (or persons) owned is delivered to another person (or persons). A new deed is created and registered at the Registry of Deeds in one of Massachusetts 21 Registries before being handed over to the grantee, i.e. the new owner. The place where the deed is registered depends on the physical location of the property within the state.
One term that often confuses people is that of ‘title’. While a deed is the document that provides proof of ownership, the actual owner of the property is said to have ‘title’ to that property. The former owner, who previously had title to the property, and the new owner, who now has title to the property, will be named on the new deed.
What information does a deed have on it?
Every deed will have the following information:
- The name of the grantor;
- How the grantor gained title to the property originally; usually identified by the date, book and page number of the previous deed held by the grantor;
- The name of the grantee;
- Whether the grantee is a single person or more than one person, e.g. joint ownership;
- The amount paid in the transaction, called the ‘consideration’. If there was no money paid, e.g. it was a gift, then the consideration recorded on the deed will be one dollar ($1);
- Statement from the grantor expressing intention to convey the title to the grantee.
- Property description, which must be accurate enough to make it unmistakably identifiable;
- Property address;
- Grantor’s signature;
- Grantor’s signature witnessed by a notary;
- Date of execution of the deed, i.e. when it was signed.
Types of deed
There are three main types of deed used in Massachusetts. These are:
- warranty deeds;
- quickclaim deeds; and
- release deeds.
The basic difference between warranty deeds and the other two types is that they come with a guarantee that there is clear title with the property transfer, i.e that the property belonged to the grantor alone and there were no other interests in that property. This means that the new owner can be sure that there are no liens or encumbrances’ attached to the property. This is important if the transfer of title is between strangers and especially if the new owner is purchasing the property using a mortgage. Lenders are unlikely to provide a mortgage arrangement to anyone who does not have a warranty deed.
Warranty deeds also mean that the new owner can potentially sue the previous owner if it becomes apparent that the grantor did not have clear title of the property and there were subsequent claims on it.
Warranty deeds give the purchaser much more certainty about the status of ownership of the property that could have gone through several, even many, previous transfers of ownership over its existence, bearing in mind that some properties in Massachusetts might date back to the eighteenth century!
Quickclaim deeds, on the other hand, do not provide a guarantee that there were any other interests in the property prior to that of the grantor. Perhaps surprisingly, quickclaim deeds are actually more common in Massachusetts than warranty deeds, but typically used when grantor and grantee know and trust each other well, such as a property transfer within the same family. Quickclaim deeds still come with an assurance that the grantor had title to the property, but there is no assurance that it does not come with other encumbrances not mentioned already in the deed.
Release deeds, also called release quickclaim deeds, have the least assurances of title attached to them and are used when there is the least concern about transferring ownership because of greater levels of trust between grantor and grantee and little or no money involved.
Pros and cons of warranty and quickclaim deeds
Warranty deeds provide much more certainty about title than quickclaim deeds and are to be preferred when a purchase is involved. Warrant deeds showing clear title may be compulsory if a mortgage is to be arranged. Quickclaim deeds, however, are faster and simpler and may be all that is necessary when transferring, adding or removing a family member or there is a divorce settlement.
Advice to prospective new owners of property
As real estate law is quite complex, you are advised to secure the help of a real estate attorney when contemplating acquiring a new property, especially if you are purchasing it and will need to purchase it with a mortgage. An attorney can make a title search of the property to ensure that there are no known other interests in the title other than that of the seller or encumbrances that have been stated to exist by the seller. A warranty deed will need to be created if a mortgage is to be agreed for the purchase. Even if the transfer is between family members and there are no payments involved, it can still be advisable to get an attorney to do a title search to make sure there are no liens or encumbrances attached to it.