Desiring a Deed? Quit Claim or Warranty?
There are numerous types of deeds allowed under Oklahoma Law but, prior to really delving into the differences, we must first establish what “warranty” means in the context of a real estate deed. If a deed comes with a warranty of title, the grantor is holding out to the public (and the buyer) that they own the property free and clear of third-party claims. Further, with a warranty, the grantor is guaranteeing their title. Generally this also means that the grantor will assist the grantor in curing any issues that might arise after the conveyance. This also goes along with title insurance (see another one of our articles).
For example, if a full warranty deed is used, the grantor agrees to defend the grantee if a third party comes from the woodwork and argues they own the property (i.e. adverse possession, an encroachment, or some other claim against the property).
Now, lets delve into deeds. There are two “main” types under Oklahoma Law. The first and easiest to understand is the quit claim deed (or QCD). A quit claim deed conveys from grantor to grantee without any warranty of title or ownership. Grantor does not hold any further obligations to grantee. This is the caveat emptor scenario. More than likely, a QCD can be used when the parties are either generally sure of the title or completely unsure. For example, conveyances between husband and wives or other family can be done using a quit claim deed.
The second “main” type is a warranty deed. These types warrant, or guarantee, title from the inception of the property against all other claimants. While this sounds scary, if a warranty deed is desired, a closing company and title attorney will do all of the leg work. A closing company/title attorney will search the public record of the property and ensure that there are no other claimants.
Now that we have the basics, Oklahoma has plenty of other deed for specific situations as well:
Special Deed Types:
(1) Sheriff’s Deeds — These deeds result from a foreclosure. Assuming the foreclosure was done correctly, these generally take good title (although I’ve had some major issues if said deeds/foreclosures are done incorrectly). Most of the time, these are acquired by the bank that held the note & mortgage, but they are public sales.
(2) Resale Deed — A deed from the County Treasurer from a tax sale. Essentially, the prior owner did not pay their ad valorem taxes and (eventually) the property was sold for said owed taxes. These always require a quiet title action to clear up title. You should also be aware of the Right of Redemption and the Occupying Claimant statutes.
(3) Special Warranty Deed — an Oklahoma Special, this warranty deed only warrants, or guarantees, title during the period of grantor’s ownership. For example, the grantor will not defend the grantee for issues that arise under a prior owner.
(4) Transfer on Death Deed — a transfer on death deed is a deed that only becomes effective after the death of the grantor. As we always tell our clients, whomever you are transferring the property to on death needs to be aware. They only have a short period after the death of the grantor to file an affidavit accepting the property. If that window is missed, the property goes into probate.
(5) Life Estate Deeds — a life estate deed conveys an interest to use/possess for the period of the grantee’s life, but once the grantee died, ownership reverts either back to the grantor or, more likely, to the remainderman named in the deed. These are seldom used as there are better legal mechanisms.
Conclusion:
If you are going to take title (ownership) of a property, but you are unsure of what form you wish that ownership to take, please give us a call. It is generally a much easier process to correctly convey title in the first place than go back and correct it after the fact.