3 Types of Deeds to Transfer Property in South Carolina
A deed is a legal document for transferring ownership of property. Your choice of deed matters a great deal. There are legal risks to acquiring ownership of property, and a deed can provide protection to buyers in South Carolina.
At Surasky Law Firm, we have years of experience with real estate transfers. We can help either buyers or sellers and discuss ways to protect themselves in transactions. Contact us today to speak with our attorney about your case.
In this article, we look at the 3 main types of property deeds before discussing ways to protect yourself as a buyer.
A quitclaim deed is a popular option. With this deed, an owner transfers whatever rights they have in the property. They make no guarantees to the purchaser.
For example, imagine the following. Kim transfers her property to Michael using a quitclaim deed. However, the land has a construction lien on it. That means that Kim does not fully own the property free of any encumbrances. When Kim uses a quitclaim deed, she transfers the property along with the lien to Michael.
Unfortunately, Kim might not even know that there is a lien on the property, or she might hide that fact from Michael. Sadly, Michael has no protection because the property was transferred using a quitclaim deed. He only gets whatever ownership interest Kim had in the property.
In some situations, the grantor might not have any ownership interest in the property. In that case, the buyer ends up getting nothing with the deed. That is the real risk with quitclaim deeds.
A grant deed is another option for transferring property. It is also called a limited warranty deed or a special warranty deed. The seller only promises two things with this deed:
1. The seller has not transferred the property to someone else, and
2. The seller has not done anything to encumber the property.
Note that the seller does not warrant that the property is free of all liens or other defects. For example, a lien might have existed when the grantor obtained the property. Instead, the granter is only promising that they didn’t take any action that resulted in liens or restrictions. That’s a promise—but a limited one. Purchasers still face a risk that the property could have a lien or other defect.
A warranty deed provides the most protection to South Carolina real estate purchasers. The grantor warrants the following with this deed:
The grantor is the rightful owner of the property.
The grantor has the legal right to transfer the property.
The property is free and clear of liens and outstanding claims.
The property can withstand any third-party claims to the property.
A warranty deed provides the greatest protection to buyers. The seller is warranting that there are no defects that predate the seller’s ownership of the property.
What happens if there are claims on the property?
In that situation, the grantor could be in breach of the warranty. This is like being in breach of a contract. The grantor would need to either pay off the lien or try to defeat it in court. Ultimately, the buyer could bring a legal action against the seller if they suffer financial loss.
Which Deed Should You Use?
The answer to this question depends on whether you are the seller or buyer. Naturally, buyers want as much protection as possible. Imagine purchasing a parcel and receiving a quitclaim deed, only to find out that the seller didn’t have any ownership interest in the property. The buyer might not have any legal recourse against the seller.
By contrast, a seller wants to make as few promises as possible. A warranty deed means they could end up getting sued if they breached the warranty. There are fewer risks with a grant deed and virtually none with a quitclaim deed.
Although it provides fewer protections, a quitclaim deed might be acceptable in certain situations. For example, two spouses might transfer a piece of property between themselves as part of a divorce. We might also use a quitclaim deed to transfer property into a living trust.
Were You Financially Harmed by a Title Defect?
Buyers might be shocked when an undisclosed lienholder tries to foreclose on the property. You could end up losing the property or need to pay an attorney to litigate the claim on your behalf.
The deed matters in this situation. If you had a warranty deed, then you could pursue legal action against the person who sold you the property. You might also have legal standing to sue them if you received a limited warranty deed (grant deed).
Other Ways to Protect Yourself
Receiving a warranty deed is one way to protect yourself. Ideally, however, you want to know about any liens or other encumbrances on a piece of property before buying it. That means a title search.
A title search can uncover any liens or restrictions on the property and is required by a lender if you need a mortgage. A title search will also confirm the right of the seller to sell the property.
A title researcher will go through public records to create an abstract of title. They can trace back in time to confirm that the seller has an unclouded title. The researcher will also try to uncover liens, property taxes, and easements on the property.
A buyer can also purchase title insurance for additional protection. This insurance will protect against any defects missed in the property search. For example, you might have had a title search performed, which didn’t turn up any liens. But the search was inadequate, and a lienholder tries to foreclose on the property. You might use title insurance to pay off a lien. Title insurance provides added protection to homebuyers and should last for as long as you own your home.
Contact Surasky Law Firm for Deed Transfer Law
Choosing the right deed ensures a smooth and secure transaction, but it's only one piece of the puzzle. A thorough title search and comprehensive title insurance provide layers of protection against title defects and unexpected claims. Contact Surasky Law Firm today for legal help surrounding a deed transfer. We have the expertise to guide you through the complexities of property transfers and safeguard your interests every step of the way.