Deeds Wiley and Gemma are neighbors. Wiley’s lot is extremely large, and his present and future use of it will not involve the entire area. Gemma wants to build a single-car garage and driveway along the present lot boundary. Because of ordinances requiring buildings to be set back fifteen feet from an adjoining property line, and because of the placement of her existing structures, Gemma cannot build the garage. Gemma contracts to purchase ten feet of Wiley’s property along their boundary line for $3,000. Wiley is willing to sell but will give Gemma only a quit claim deed, whereas Gemma wants a warranty deed. I will provide a brief summary below of the differences between these deeds as they would affect the rights of the parties if the title to the ten feet of land later proved to be defective.
Different types of deeds provide different degrees of protection against defects of title. A warranty deed contains the most promises of title and thus provides the greatest protection for the buyer. A warranty deed includes six covenants, by which the Grantor is the legal owner of the property and has the right to possess the property. The first three covenants are “Present Covenants” and the second three are referred to as “Future Covenants”. (Contracts 101 - Warranty vs. Quitclaim Deeds Retrieved from http://www.pohlshort.com/CM/Publications/Publications35.asp)
Present Covenants warranty that Wiley is the legal owner of the property and has the right to possess it, the right to convey, and the covenant against encumbrances on the land. Future covenants consist of quiet enjoyment, warranty, and further assurances.
A warranty deed would protect Gemma from any disturbances as warranty deeds commonly include the covenant of quiet enjoyment. This covenant guarantees Gemma will not be disturbed in her possession of this land by the seller or any other third party. A warranty deed would also protect Gemma from all other claims of ownership of the property. The future covenants are important as they represent a continuing obligation of Wiley to take curative action if subsequent purchasers become involved. Special language is required by most states to make a warranty deed.
A quit claim deed offers the least amount of protection for any defects in the title. Should Gemma accept a quit claim deed she would have no way of knowing if the title to this land was clear and owned by Wiley or if there were any other encumbrance against the title. Wiley is not warranting what he owns with a quit claim deed however he is transferring what he owns to Gemma. Should a forgotten Lien holder emerge one day and be the true owner of this land then Gemma would have no legal right to the land. When the seller wants to offer a quit claim deed it can usually be seen as a “red flag” that the seller may not own the property or does not know whether they own the property. In situations such as divorce a quit claim deed can prove quite useful.