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Understanding deeds and how they work is an important part of acquiring real estate. Since a deed is a legal document, you’ll want to ensure that you fully understand its purpose and meaning before completing any real estate transaction.

When you close on you rental property, the title company will supply you with a huge stack of documents to sign. One important piece of paperwork is the deed. A deed is a document that is signed by both the seller and the buyer, signifying the transfer of ownership.

A deed is recorded at the county level, which oftentimes has slow moving processes. Your title company will often email you a copy of the deed, but it’s still important to obtain the paper copy. There are two main types of deeds: a grant or warranty deed, and a quit claim deed. Although both types of deeds transfer ownership, each of these have different purposes.

A grant or warranty deed contains warrantees of title—this means the title company conducts an extensive search, ensuring that the buyers actually owns the property and has the right to sell it. Most of the time, you’ll want to use this type of deed when purchasing a new rental property.

A quit claim deed does not contain these guarantees, but can still be useful under certain circumstances. For example, we have used a quit claim deed when transferring a property that we own to an LLC. In this instance, the warranty deed was conducted when we initially purchased the property. You can also use this type of deed if you’re working with someone you feel you can trust.

If you want to learn more about deeds and how they work, check out this podcast episode! 

 Understanding deeds and how they work is an important part of acquiring real estate. Find out what you need to know as a real estate investor...

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