August 7, 2013.
What is a Warranty Deed?
A Warranty Deed is a type of real estate deed where the seller guarantees that it holds clear title to the real estate and has a legal right to sell it to the buyer. The guarantee is not limited to when the seller owned the property, rather the guarantee extends back in time to the property’s origin.
What is a Quit Claim Deed?
Unlike a warranty deed, a quitclaim deed contains no title covenant or guarantee and therefore offers the buyer no warranty as to the status of the property title. The buyer is only entitled to whatever interest the seller actually possessed at the time the transfer occurred. This means that the seller does not guarantee that it actually owns the property at the time of the transfer or that the title is free and clear. Because of this lack of warranty, quitclaim deeds are most often used to transfer property between family members, as gifts, and for transferring property into a business entity or trust. Quitclaim deeds are rarely used to transfer property from seller to buyer in a traditional property sale.
What is a Title Search?
Most buyers hire an abstractor to perform a title search and have an attorney review the abstract for clear title before they purchase the real property. In Iowa lawyers write title opinion letters and ensure clear title for their client. Buyers should beware of any encumbrances, easements or restrictions on the property they are purchasing and reviewing the property title is generally part of the buyer’s due diligence process before the closing. Buyers can also purchase title insurance which can cover many types of losses or in Iowa buy a Title Guaranty certificate or rider to cover if title problems are discovered later.