Ultimate Guide to Deed Types for Real Estate Investors

As a real estate investor, understanding the different types of deeds is crucial for protecting your investments and navigating property transactions smoothly. Deeds play a vital role in transferring ownership and defining the rights and responsibilities of both buyers and sellers.

Below you’ll learn about the various types of deeds, their implications for real estate investors, and how they can impact your property dealings. From general warranty deeds to quitclaim deeds, we’ll cover the essentials you need to know to make informed decisions in your real estate ventures.

You’ll also discover the importance of title insurance, how to navigate deed restrictions, and ways to protect yourself from deed fraud. By the end of this guide, you’ll have a solid foundation in deed types and be better equipped to handle property transactions with confidence.

Why Deeds Are Important

Deeds play a critical role in real estate investing. When you buy a property, the deed is the legal document that transfers ownership from the seller to you. Without a deed, there’s no formal proof that you own the property.

As an investor, it’s essential to understand the different types of deeds you might encounter. Some deeds provide more protection than others, and the one you choose can impact your risk. Knowing the details can help you avoid costly mistakes down the road.

Deed laws can vary depending on the state you’re investing in. This is why it’s important to consult with a real estate attorney who knows the local regulations. They can help you navigate any specific requirements or nuances.

Having title insurance is also vital. It protects you from issues related to the deed, like undisclosed liens or ownership disputes. Even if the deed appears legitimate, problems can still arise, and title insurance acts as a safety net for your investment.

Two Most Common Deeds

When investing in real estate, you’ll most often encounter two types of deeds: General Warranty Deeds and Special Warranty Deeds.

These deeds differ in the level of protection they offer, and we’ll go into detail about each below.

General Warranty Deed – Provides the highest level of protection to the buyer, covering the property’s entire history. Ideally, you want this when buying a property to ensure you’re protected from any title issues, even those that occurred before the seller owned the property.
Special Warranty Deed – Offers limited protection, covering only the period when the seller owned the property. This is what you’d likely want to provide when selling to limit your liability to the time you owned the property, protecting yourself from issues that existed before your ownership.

General Warranty Deed

A General Warranty Deed is the most protective type of deed you can receive as a real estate investor.

Guarantees Provided by the Seller – The seller guarantees that they own the property, have the legal right to sell it, and that there are no undisclosed claims or debts tied to the property.
Full History Guarantee – The seller is responsible for any title issues not only from their ownership period but also for any problems that occurred before they owned the property. This means if a previous owner had an unresolved lien or dispute, the seller is on the hook to address it.
Examples of Title Issues – Let’s say a prior owner had a lien that wasn’t paid off or failed to disclose a boundary dispute. With a General Warranty Deed, the seller guarantees to handle these problems, even if they go back years or decades.
Preferred by Buyers – Because this deed provides the broadest protection, it is typically preferred by buyers, especially in standard residential transactions where buyers want maximum security.

Special Warranty Deed

A Special Warranty Deed offers a more limited form of protection for real estate buyers.

Limited Guarantees – The seller guarantees that there were no issues with the title during their ownership. However, they are not responsible for any problems that may have existed before they took ownership.
Key Differences from General Warranty Deed – Unlike a General Warranty Deed, the seller is only liable for claims or disputes that arose during their period of ownership. Any issues that occurred before that are not covered.
Limiting Seller Liability – Real estate investors might negotiate to provide a Special Warranty Deed when selling a property to limit their future liability. This can protect the investor from being responsible for issues that predate their ownership.
Common Scenarios – You’ll often see Special Warranty Deeds in transactions involving bank-owned properties, foreclosures, or commercial real estate, where sellers want to limit their exposure to title risks.

Title Insurance and Deeds

Title insurance is one of the most important protections you can have when investing in real estate. It’s a one-time payment made at the time of purchase, designed to protect you from financial loss due to issues with the property’s title—problems that may surface long after the sale.

For real estate investors, title insurance is essential. It shields you from risks like ownership disputes, undisclosed liens, or fraudulent deeds. While technically optional if you’re buying with cash, it’s required by lenders when you take out a loan. Lenders insist on title insurance to protect their investment for the life of the loan.

It’s important to understand the difference between buying title insurance and providing it. When you purchase a property, you buy title insurance to protect yourself. When you sell a property, you’re typically providing title insurance for the buyer. This reassures the buyer that there are no hidden issues with the title that could affect their ownership.

Title insurance protects against various issues that might arise from the deed, like previously undisclosed liens or ownership disputes. If a title problem is discovered after the sale, the insurance will cover legal costs and compensate for losses. However, the type of deed you provide—General Warranty or Special Warranty—can impact the scope of the risk you take on as a seller.

If you’re selling frequently—whether as a fix-and-flipper or to buy more properties with loans to increase your leverage and return on equity—your exposure is higher if you’re providing General Warranty Deeds. A General Warranty Deed guarantees clear title not just for the period you owned the property but for its entire history. This can put you at significant risk if there are unresolved issues from previous owners. If a claim arises, the title company may cover the buyer’s losses but could come after you for reimbursement. And if you have assets, the title company is more likely to target you, especially if prior owners have no assets to recover from.

By contrast, providing a Special Warranty Deed limits your liability to the time you owned the property. You’re only guaranteeing that no title issues occurred during your ownership, protecting you from past issues. For investors who sell properties frequently or liquidate parts of their portfolio to accelerate financial independence, limiting this liability can be crucial to protecting your assets.

The type of deed you provide affects the extent of title insurance coverage. A General Warranty Deed offers the buyer maximum protection, covering the property’s entire history, while a Special Warranty Deed only covers the period you owned it. Regardless of the deed type, title insurance is your safety net, ensuring any issues that arise are handled without catastrophic financial losses.

As an investor, especially if you’re flipping properties or using leverage to grow your portfolio, you need to pay close attention to title insurance. It’s not just a formality—it’s essential protection that can save you from major financial headaches. Don’t overlook this.

Chain of Ownership

Here’s a story to pull together some key ideas about deeds, title and chain of ownership.

Once upon a time, there was a fabulously eccentric woman named Petunia Glitterbottom. Petunia owned a charming little cottage that was the envy of the town. One fateful evening, during a night of passion fueled by too many glasses of Prosecco, Petunia decided to gift half of her beloved cottage to her dashing lover, Fabio Flirtini. In the heat of the moment, she signed a deed, transferring 50% ownership of the property to Fabio.

However, in her giddy state, Petunia and Fabio never bothered to file the deed with the county. You see, deeds don’t have to be filed to be valid; they just need to be signed and delivered. Filing it with the county is what puts the public on notice, but as we’ll soon see, failing to record a deed can lead to all kinds of drama.

Fast forward a few years, and Petunia sells the cottage. Fabio has long since moved on, and no one knows about that fateful night. The new buyer receives a General Warranty Deed, which guarantees clear title to the property not only from Petunia’s time but from the beginning of time itself. All seems well, and the property changes hands two more times, each buyer receiving a General Warranty Deed and feeling confident that their title is rock solid.

Then, we meet Sarah, the fourth buyer in this story. Sarah has happily lived in the cottage for a few months when she gets an unexpected knock at the door. Enter Lisa Flirtini, Fabio’s great-grandchild, who has recently been going through her great-grandfather’s old boxes. Among Fabio’s forgotten treasures, Lisa stumbles upon the deed from Petunia Glitterbottom, proving that Fabio owned half of the cottage.

Lisa, armed with this information and an eager attorney, sues Sarah for half the value of the property, claiming her rightful inheritance. Sarah, understandably horrified, rushes to the title company that insured her purchase, waving her General Warranty Deed and demanding they fix this mess. After all, her title insurance should cover any ownership disputes, right?

The title company grumbles but ultimately agrees to pay Lisa a hefty sum to settle the claim. But here’s the catch: title insurance companies don’t like paying out claims unless they absolutely have to. Since Sarah received a General Warranty Deed, the title company can now go after everyone in the chain of ownership—all the way back to Petunia—to recoup their losses.

This is where things get tricky. Every prior owner, starting with Petunia and including the two others before Sarah, had signed General Warranty Deeds, which means they each guaranteed clear title not just during their ownership but for the entire history of the property. The title company sues them all, hoping to claw back some of the payout.

Unfortunately, Petunia’s fortune faded long ago, and the other two owners are similarly broke. But, as luck would have it, one of the prior owners was a wealthy real estate investor named Richard “Richie” Cashington. Richie owned the cottage briefly as part of a fix-and-flip deal and signed a General Warranty Deed when he sold it. Now, even though Richie only owned the property for a short time, the title company comes after him, because he has the assets to pay.

Meanwhile, if Richie had initially sold the property with a Special Warranty Deed, the situation might have played out differently. A Special Warranty Deed would have limited his liability to the period they owned the property. In that case, the title company wouldn’t be able to go after Richie for anything that happened before he owned the cottage—leaving him free from this title disaster.

This fictional tale highlights the importance of understanding the chain of ownership and how title insurance, along with the type of deed you provide or receive, plays a crucial role in protecting your assets. Title searches, which investigate the history of a property’s ownership, can help uncover potential problems, but as we’ve seen with Fabio’s forgotten deed, even the best title search may miss something that wasn’t recorded. Title insurance serves as the safety net when these issues arise, but as Richie Cashington found out, providing a General Warranty Deed can leave you holding the bag for problems that were never your fault.

Deed Restrictions

Deed restrictions, also known as restrictive covenants, are rules that limit how a property can be used.

These restrictions are typically placed by a developer, homeowners’ association (HOA), or a previous owner to maintain certain standards or protect property values in a neighborhood.

While they can sometimes be beneficial, they may also limit what you can do with a property, which can be especially important for real estate investors.

When buying a property, you can find out about deed restrictions by reviewing the title documents during the title insurance period defined in the contract as part of your general due diligence.

However, don’t expect your real estate agent to go through the fine print—most agents aren’t trained to read deeds and are not attorneys. Instead, you’ll want to read the deed yourself and consult your dream team: your real estate attorney and title company, both of whom can help you understand any restrictions attached to the property.

Deed restrictions can significantly impact how you use the property and its future value. For example, a restriction might prevent you from building additional structures, renting the property short-term, or even changing the color of the exterior. Knowing these limitations upfront can help you avoid unexpected costs or barriers to your investment plans.

Here are some common deed restrictions and how they might affect real estate investors:

Building or Structural Restrictions – Limits on the size, type, or number of structures you can build (e.g., no additional dwellings or certain building materials).
Rental Restrictions – Rules that prevent or limit the ability to rent the property, especially for short-term or vacation rentals.
Zoning or Land Use – Requirements that specify how the land can be used, such as limiting it to residential purposes or restricting commercial use.
Architectural Restrictions – Limits on changes to the appearance of the property, such as exterior paint colors, roof types, or landscaping.
Environmental Restrictions – Regulations that protect certain natural resources, which may prevent you from removing trees or altering the landscape.

Understanding deed restrictions is crucial for investors, as they can either protect or hinder the value and use of your property.

Be sure to have these thoroughly reviewed before moving forward with any real estate purchase.

Deed Fraud

Deed fraud occurs when someone illegally transfers or alters property ownership, often without the rightful owner’s knowledge. For real estate investors, this can result in significant financial losses and disputes over ownership. Common types of deed fraud include:

Forged Deeds – Scammers create fake documents to transfer ownership without the rightful owner’s consent.
Fraudulent Transfers – Criminals pose as the property owner to sell or transfer the property, often using stolen identities or forged signatures.
Deed Theft – Fraudsters, frequently targeting vacant or distressed properties, file false deeds to claim ownership and attempt to sell the property to unsuspecting buyers.

Protecting yourself from deed fraud can be difficult because much of the prevention relies on others—like title companies, closing attorneys, and notaries—who need to be vigilant in verifying identities and documents during the transaction process. While steps such as securing title insurance and monitoring public records for unauthorized changes can help, these measures typically address the issue after fraud has occurred. The real key is ensuring that the professionals you work with are diligent in preventing fraud before it becomes a problem.

Mineral Rights

When you purchase real estate, you’re not just acquiring the physical land or structure—you’re also gaining a bundle of rights. This bundle includes various legal rights related to how you can use, control, and enjoy the property. Importantly, these rights can be conveyed separately, meaning that not all of them may be included in your purchase. For example, mineral rights, which allow for the extraction of resources from beneath the land, can be withheld or sold separately from the surface property.

Here’s a common, simple example with mineral rights.

Imagine you buy a piece of land, but the previous owner keeps the mineral rights. This means that while you own and control the surface of the land, the former owner or someone they sell the rights to could still extract minerals from beneath your property. This can affect the value and future use of the land, especially if those resources become profitable.

The Bundle of Rights

Here are the typical rights included in the bundle of real estate rights:

Right of Possession – The right to occupy and control the property as the legal owner.
Right of Control – The right to use the property for any legal purpose, subject to zoning laws and deed restrictions.
Right of Exclusion – The right to prevent others from entering or using the property without your permission.
Right of Enjoyment – The right to enjoy the property without interference or nuisance, as long as it’s within legal boundaries.
Right of Disposition – The right to sell, lease, transfer, or dispose of the property, or specific rights (such as mineral rights).

Understanding this bundle of rights is crucial for real estate investors, as you may not always receive all the rights in every transaction. For example, mineral rights, water rights, or air rights could be sold or transferred separately.

Make sure to review the deed carefully to understand exactly which rights are included in your purchase, as this can significantly impact the future value and use of the property.

Additional Deed Types

In addition to General and Special Warranty Deeds, there are several other types of deeds that serve specific purposes.

Real estate investors will likely encounter a variety of deed types throughout their investing journey.

Understanding the differences between them is crucial to making informed decisions, as each type offers different levels of protection and may carry different risks.

Quitclaim Deed

A Quitclaim Deed is used to transfer ownership interest in a property but offers no guarantees or warranties about the title’s validity or whether the seller even has legal ownership.

No Guarantees – The quitclaim deed does not promise that the title is clear or that the seller even has the right to sell the property. I could provide you with a quit-claim deed to the property you own and live in: it basically says that if I do have any rights to your property, I quit any claims I may or may not have to those rights.
Common Uses – Quitclaim deeds are often used for transferring property between family members or resolving title issues, such as clearing up a name discrepancy.
Subject-to Financing – Some investors use quitclaim deeds to buy properties “subject to” existing financing, though this comes with added risk, as the buyer takes on the property without title guarantees.

Bargain and Sale Deed

A Bargain and Sale Deed implies that the seller holds title to the property, but it provides no warranties against title defects or issues that may have occurred before the seller’s ownership.

No Warranties – The seller makes no promises that the title is free from liens or other claims.
Common Use – This type of deed is commonly used in tax or foreclosure sales, where the buyer may be purchasing the property “as is.”
Risks – Investors need to be cautious and conduct thorough due diligence, including securing title insurance, to protect themselves from potential title defects.

Grant Deed

A Grant Deed offers more protection than a quitclaim deed by providing guarantees that the seller has not previously transferred the property to someone else and that the property is free of undisclosed encumbrances.

Guarantees Provided – The seller guarantees they have not sold the property to another party and that there are no undisclosed encumbrances.
State-Specific Use – Grant deeds are commonly used in certain states, like California, as the standard for property transfers.
Comparison – While more protective than a quitclaim deed, a grant deed does not provide the full level of guarantees offered by a General Warranty Deed.

Sheriff’s Deed

A Sheriff’s Deed is issued to the buyer of a property sold at a foreclosure auction, usually to satisfy a judgment or unpaid debts.

When Issued – Typically used in foreclosure sales or tax lien sales when the property is sold by the county sheriff to satisfy the debt.
No Warranties – A sheriff’s deed offers no warranties, meaning the buyer accepts the property as-is, with any liens or title issues attached.
Due Diligence – Investors must thoroughly investigate the property and secure title insurance before purchasing a property with a sheriff’s deed to avoid potential legal or financial complications.

Deed-in-Lieu of Foreclosure

A Deed-in-Lieu of Foreclosure is when a borrower voluntarily transfers ownership of the property to the lender to avoid foreclosure.

Definition – The borrower transfers the deed to the lender in exchange for forgiveness of the mortgage debt.
Advantages – This option allows the borrower to avoid the more severe financial and credit impacts of a foreclosure, while the lender avoids the time and expense of foreclosure proceedings.
Investor Impact – Investors acquiring a property via a deed-in-lieu should be aware that title insurance is essential to ensure there are no unresolved liens or issues with the title.

Executor’s or Administrator’s Deed

An Executor’s or Administrator’s Deed is used to transfer property from a deceased person’s estate during the probate process.

Use in Probate – This deed is executed by the estate’s executor or administrator to transfer property to heirs or buyers as part of settling the estate.
Warranties – Depending on the state and circumstances, these deeds may provide limited warranties, often limited to the period when the estate held the property.
Legal Authority – It’s important for investors to verify that the estate’s executor or administrator has the legal authority to sell the property and that the sale complies with all probate court requirements.

Understanding these different deed types will help you make better-informed decisions as a real estate investor, whether you’re buying properties at a foreclosure auction, transferring ownership within your family, or purchasing through estate sales.

Always conduct due diligence and seek legal advice where necessary to avoid potential risks.

Ways to Take Title

When investing in real estate, it’s important to understand the different ways you can take title to a property.

Let’s clarify the distinction between a deed and title:

Deed – A legal document that transfers property ownership
Title – The legal concept of property ownership itself

The way you take title—how ownership is recorded—affects your rights, estate planning options, and liability, so it’s critical to choose the right method for your circumstances.

The way you take title to a property can impact your ability to control and transfer it, your share of ownership, and how it’s passed down if something happens to you. It can also affect your liability and how your assets are treated legally. How you take title varies by state and legal context, so it’s important to consult with legal professionals when deciding the best method.

Here are some of the most common ways to take title:

Severalty – Ownership by one individual or a single legal entity, such as an LLC. In this case, you have full control over the property and can sell or transfer it without needing anyone else’s permission.
Joint Tenants – Co-ownership between two or more people, where each owner has an equal share. A key feature is the right of survivorship, meaning if one owner dies, their share automatically transfers to the remaining owner(s).
Tenants in Common – Co-ownership where each owner may have unequal shares and there is no right of survivorship. Upon death, an owner’s share passes to their heirs rather than the other co-owners.
Tenancy by the Entirety – Similar to joint tenancy but available only to married couples in certain states. It includes the right of survivorship, and the property can’t be sold or transferred without the consent of both spouses.
Community Property – In community property states, property acquired during marriage is owned equally by both spouses. Each spouse has equal ownership rights, and property can’t be transferred without the consent of both parties.

LLCs and Taking Title

An LLC (Limited Liability Company) can take title to a property, and even if the LLC has multiple members, it’s considered ownership in severalty because the LLC functions as a single legal entity. The LLC alone is the owner, regardless of how many members it has.

However, when an LLC takes title with another individual or another entity, such as a separate LLC, this introduces co-ownership. In these cases, you’ll need to choose how to structure the ownership among the parties, as you can no longer hold the property in severalty.

For example, if an LLC buys a property together with an individual, they might take title as Tenants in Common. This would allow each party—both the LLC and the individual—to own a specific percentage of the property, which can be unequal. Upon death, the individual’s share would pass to their heirs rather than to the LLC. Similarly, if multiple LLCs buy a property together, they would also likely take title as Tenants in Common, unless they opt for another structure.

In situations where more than one party (whether individuals or entities) holds title, decisions about ownership structure affect not only control of the property but also inheritance rights and financial responsibilities. It’s important to understand that these decisions can have tax implications, so it’s wise to consult both your attorney and CPA when structuring property ownership to ensure you’re achieving your desired legal and tax treatment.

While LLCs can offer benefits like liability protection and estate planning flexibility, the key takeaway here is that when multiple entities or people take title together, you must choose a form of co-ownership, such as Joint Tenancy or Tenants in Common, and understand the legal and tax consequences of each choice.

Corrective Deeds

A Corrective Deed is a legal document used to correct errors or mistakes in an original deed. These errors can include things like misspelled names, incorrect property descriptions, or other clerical issues that might cause confusion or legal problems down the road. A corrective deed doesn’t transfer new ownership but instead corrects the existing deed to accurately reflect the proper information.

Corrective deeds might be used if, for example, the name of the buyer or seller was misspelled, or if the legal description of the property was entered incorrectly during the original closing. It’s a relatively simple process, but it’s crucial for ensuring that the public record reflects accurate ownership details.

Whenever you’re closing on a property, it’s a good idea to take a minute to carefully review the deed. Look out for:

Correct Names – Ensure your name, as well as the seller’s, are spelled correctly.
Legal Description – Double-check that the legal description matches what you see in the contract and the title work.
How You Plan to Take Title – Confirm that the deed reflects your chosen method for taking title, whether it’s severalty, joint tenants, tenants in common, or another form.

Paying close attention to these details at the closing table can help avoid the need for a corrective deed later on and prevent any legal complications down the line.