Deed Information for Loan Officers

By Arthur D. Smialek, Esq.

Deeds can be distinguished by the types of warranties a grantor may provide and by the type of co-ownership that may be provided for in a deed.  A grantor is the person who is giving the title to the land.  The grantee is the person who is receiving the title.

Warranties
The following refers to what protection a grantor gives to a grantee, not to how a grantee may hold title with co-owners:

  • Quit Claim Deeds:  This type of deed transfers to the grantee(s) whatever title the grantor has at that time.  The distinguishing factor between this and other types of deeds is that the grantor does not give any warranties.  No assurances are given within the deed itself that the grantor has title or that he will defend the title against adverse claims.
  • General Warranty Deeds:  This transfers to the grantee the property described as well as gives the grantee a warranty that the grantor actual had title and that he will defend the title should any adverse claims arise.  This is the most frequently used type of deed in residential transaction.  Most contracts require this type.
  • Limited Warranty Deed:  This transfers the described property to the grantee, however the grantor will only defend the title against claims which would be based in the time period during which he held title.  Therefore, if an adverse claim predates the time in which the grantor took title, the grantor will not defend.
  • Fiduciary Deeds:  This transfers property to the grantee with covenants that the grantor was duly appointed executor, administrator, guardian or trustee, that the grantor was authorized to make the sale, and that, in all proceedings, he has complied with the law.

Tenancies
The following refers to how two or more parties hold title, not to whether warranties exist in the deed:

  • Tenants in common:  When one owner dies, his portion of the property owned jointly will descend to and will be opened in Probate Court to prove exactly who the new owner of his interest is.  If a general warranty deed or a quit claim deed is given with no survivorship language, then the co-owners will be tenants in common.
  • Survivorship Tenancies: when one owner dies, his interest does not become a probate asset.  Therefore, it will not descend to his heirs or devisees.  Instead, his interest passes to his co-owners.  The surviving co-owners must still include the property in the decedents’ estate tax return and an Affidavit of Survivor must be filed with the county recorder to show the death and to remove the name off the tax duplicate.  Survivorship tenancies are created through the use of statutory survivorship forms or a general warranty deed-joint and survivorship form. 

A loan officer should never advise a credit union member as to how to take title.  This is a question best answered by legal counsel.  When you have doubts, please call one of our attorneys.  We can help you.

Art Smialek is the Supervising Attorney of Thoroughbred Title Agency, Inc. (TTA), working hand-in-hand with affiliate, Weltman, Weinberg & Reis Co., LPA. He practices in the Real Estate Default Group and can be reached at 216.685.1006 and asmialek@weltman.com.

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