PROPERTY TRANSFERS – You got the house, but what else came with it?

In Arkansas, there are a number of different situations in which real property is transferred from one person to another, but they each have one thing in common – a deed. A deed is the legal document which officially transfers ownership of a piece of property. Without a deed, there cannot be an actual transfer. However, not all deeds are the same. Three of the most common types of deeds are the Warranty Deed, the Quitclaim Deed, and the Beneficiary Deed. Each have their own unique benefits and qualities. Below, we will detail the differences between the deeds and hopefully help you understand the advantages and pitfalls of each.

WARRANTY DEED – The Deed of Deeds

Warranty Deeds are the most commonly used deeds, and for good reason – they offer the most protection to the person who is receiving the property. Imagine finally buying your first home, only to learn a year later that someone other than the seller also had some sort of claim to that property. If you did not receive a Warranty Deed from the seller, then you basically have no recourse against the seller for not providing you with a “clean” title to the home. So, what is a Warranty Deed, exactly?

A Warranty Deed is a guarantee, or promise, from the seller to the buyer that the seller has full title to the property, and that no other person has any claim or interest to the property. If it later turns out that there are other people with claims or interests, then the buyer can sue the seller for breach of the guarantee. Because the Warranty Deed carries with it a guarantee of full, clean title, the seller of property will often want to have a title search performed on the property just to double check that there are no unknown issues with the title, which often results in a longer and more costly process.

QUITCLAIM DEED – The Quick Easy Solution

Unlike a Warranty Deed, the Quitclaim Deed does not include any guarantees about the Property’s title. All a Quitclaim Deed does is transfer the exact same rights the owner has at that specific time. If there are outstanding claims against the property, the buyer will be subject to all of the claims. So why would anyone accept a Quitclaim Deed instead of a Warranty Deed? Well, for one, using a Quitclaim Deed is often a much faster and cheaper way to transfer property. That is one reason the Quitclaim Deed is typically used when a person wants to transfer a piece of property to a family member. People also use Quitclaim deeds when selling a cheaper piece of property.

For example, say John Smith inherited a piece of property from his great aunt but the property is in terrible condition. John may decide to sell the property cheap for cash to someone that wants to restore the property. In that instance, John will not want to warranty any of the property, instead, he will just transfer what rights he inherited to the property through a Quitclaim deed. There are many beneficial uses for a quitclaim deed, just make sure you understand what you are getting when you transfer or purchase property this way.

BENEFICIARY DEED – The Deed that Transfers on Death

A common question attorneys get asked is how to best go about ensuring their property will be received by the right people after they die. While it is always a good idea to have a will, that is not always the most efficient way to ensure that the right person receives your property once you’re gone. Why? Because in order for your wishes to be carried out, your will must go through the “Probate” process which can be both timely and expensive. Luckily, Arkansas law provides multiple ways to avoid the Probate process and still have your wishes followed. One of these non-probate options is the Beneficiary Deed. A Beneficiary Deed allows someone to transfer real property (such as a home) to a designated person – the “Beneficiary” – automatically after their death without having to go through the Probate process.

The benefit is that the person granting the property to the buyer keeps full title to the property until their death. Upon death, the transfer to the other person happens automatically and the buyer (or family member) will be the bona fide owner of the property. Like with the Quitclaim deed, a beneficiary deed only transfers over what rights the seller (or grantor) has to the property at the time of death. Any claims against the property are not warrantied. 

Eason Law can Help

At Eason Law, we have helped many property owners with their real estate needs. Whether it is transferring property, property disputes, drafting real estate documents or contract disputes, our experienced team can help you through the process.