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Deed

A deed is the document that transfers ownership rights in real property to another person.  There are two primary types of deed; a wrranty deed and a quit claim deed.

Warranty deed essentially says "I warrant (guarantee) 1) that I am transferring enough rights in this property to you so that you have a fee simple absolute, 2) that you are receiving the right to possess the property (quiet possession), and 3) that there are no claims against this property and no one else holds any interest in this property other than those that I already have noted in this document. I also promise to help defend your rights (and pay the cost of defending your rights) to this property if someone else raises a pre-existing claim to this property, that is, a claim that supposedly arose prior to me presenting you this warranty deed."

Example - person A owns land and granted a mortgage to the bank as part of a loan agreement when A borrowed from the bank. The bank properly recorded the mortgage. Person A then sells the land to person B, but person A does not pay the bank, so the bank has not released its mortgage. Person A then fails to pay the bank and the bank seizes the land even though it is owned by B.

The bank prevails because its right to seize the land existed prior to B buying the land from A. Under a warranty deed, A must help defend B against the bank even though they will lose.

In this example, B will have a cause of action against A, especially if A agreed with B that A would have the bank release the mortgage on the land that B is buying.

B may also have a claim against an attorney or title insurance company if one was hired to conduct a title search and they failed to find the bank's interest in the land.

Quit-claim deed - "A quitclaim deed grants or conveys only the right, title and interest of the party executing it." Gilbertson v. Gilbertson, 452 N.W.2d 79 (ND 1990), citing Aure v. Mackoff, 93 N.W.2d 807, 811 (N.D. 1958). With a quit-claim deed, the transferor makes no guarantee as to what rights the transferee will receive. Instead, the transferor is transferring to the transferee whatever rights the transferor has. These rights could be a fee simple absolute, or a life estate, or some other partial ownership interest. In an extreme situation, the transferor may not have any interest in the land but is executing a quit claim deed to remove any uncertainty about the ownership of the land.

Example.

Last updated July 11, 2005

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