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Knowledge Base

Most Common Types of Deeds in India

Introduction:

A deed can be defined as a written instrument, signed and delivered by one individual, known as the grantor, conveys the title of the real property to another individual, known as the guarantee. In other words, a deed is a signed legal instrument that provides specific rights of an asset to the guarantee, giving them the privilege of ownership.

So, a deed is, in general, any legal document in writing which confirms and passes the interest, right, property, etc from one party to another. A deed, in simple words, is a type of legal instrument consisting of a binding promise to do something. Deeds are most commonly used to transfer the ownership of automobiles or land between two parties.

The main requirement of a legally valid deed is that the grantor, the original owner of the land conveys his interest to the guarantee, the recipient of the title. Apart from that, it is also important that the grantor must have the legal capacity to convey the title of the property to the other party, which means that the grantor must be a major person (above eighteen years old) with a sound mind.

A deed can fulfil the following purposes:

  1. pass legal or equitable interests in property or other rights
  2. create a binding obligation on a person
  3. affirm an agreement that passes legal or equitable interests in property or other rights.

There are certain essentials that are needed to fulfil for a deed to be legally valid. A deed must be:

  1. in writing
  2. signed
  3. witnessed by at least one person who is not a party to the deed
  4. expressed to be a deed
  5. delivered to the other party

Unlike a contract or agreement, a deed does not need to mention consideration for it to be legally binding. A deed does not need consideration because of the idea that a deed is the most solemn the indication that the parties intend to be bound.

The main differences between an agreement and a deed is that:

  1. There is no requirement for consideration for a deed to be binding.
  2. A deed is binding on a party when it has been signed, sealed and delivered to the other party, even if the other party has not yet executed the document.

Types of Deeds:

There are various kinds of legal deeds in India:

  1. General Warranty Deed
  2. Special Warranty Deed
  3. Quitclaim Deed
  4. Bargain and Sale Deed
  5. Grant Deed
  6. Fiduciary Deed
  7. Trust Deed
  8. Court Order Deed

General Warranty Deed:

A general warranty deed is usually and largely used for residential real estate sales. This type of deed includes a warranty. “Warrant” is the key term and it means “guarantee.” And because of this guarantee, the seller or grantor is legally bound by the warranties conveyed and promised. In a general warranty deed, the grantor provides various covenants, also known as warranties, for the title, promising that the title to the property is good and clear, and the property is free from any kind of debts and liabilities.

Specifically, this type of deed promises that the grantor/seller owns the property and has a legal right to sell that property and this deed also ensures that it is free and clear of any liens, debts, or encumbrances. This kind of deed acts as a guarantee to the buyer in spite of being a warranty deed and if any problems arise the buyer has the right to claim compensation from the seller.

A general warranty deed provides the highest level of protection for the buyer because it includes important covenants or warranties conveyed by the grantor to the grantee. Generally, the covenants or warranties of title include various information such as warranty of seisin, the right to convey, freedom from encumbrances, and a defence of the title as to all other claims.

Special Warranty Deed:

A Special Warranty Deed is not as same as the General Warranty Deed.  A special warranty deed does not provide as much protection for the buyer as a general warranty deed provides. Here the grantor or seller’s guarantee, given to the buyer or grantee will not cover the property in its entire history but only during the period when the grantor had the ownership of it. In general, the seller only guarantees for the issues which are created during the period of the seller’s ownership of the property. It transfers all the rights to the buyer but warrants only what is specifically mentioned.

The grantor of this type of deed conveys the property with just two warranties:

1.      that the grantor does indeed hold title to the property, and

2.      that the property was not encumbered during the grantor’s period of ownership.

However, it does not give any guarantee that it was unencumbered before the grantor took ownership. This means that the seller or grantor might not have any knowledge of what happened with the property before the grantor took the ownership, hence, it will not guarantee that the title was free before that. 

A special warranty is most often used for commercial property transactions. Therefore, this kind of deed is usually made when a trust or residential real estate is transferring property, or when a commercial property is sold.

Quitclaim Deed:

A Quitclaim deed is usually made when both parties are in some kind of relationship with one another, for example, family members, divorcing spouses, and friends and mostly by people who are well acquainted with each other etc. This kind of deed is intended to pass any title, claim or interest that the grantor has in the property but it makes no representations that such title is legally valid or correct. So basically, this type of deed allows for a simple transfer of property rights and claims to another party and most of the time there is no money involved and in addition to that, there is no warranty or guarantee.

A quitclaim deed provides the least protection to the buyer, and its uses and benefits are very limited. This type of deed merely transfers the interest the grantor might have in the property. Hence, it can be said that a quitclaim deed does not guarantee that the grantor has any interest to convey or transfer to the other party. In this kind of deed, the grantor terminates or relinquishes any right or claim to the property that he might have and allows the right or claim to be transferred to the recipient or grantee.

The quitclaim deed does not make any warranties against liens or encumbrances. Therefore, this kind of deed does not carry any kind of warranties at all and it only conveys the interest that the grantor had or might have in the property.

Read Also – Rectification Deed – All You Need to Know

Bargain and Sale Deed:

Bargain and sale deed usually involves the sale of real estate sales or court seized properties. This kind of deed works in a similar manner as a quitclaim deed and transfers property similarly as a quitclaim deed. Similar to a quitclaim deed, bargain and sale deed also does not guarantee to the buyer or grantor that the seller or grantee owns the property with a good title but unlike quitclaim deed, it involves the transfer of money. This deed simply states that the grantor holds title to the property, but it does not declare that it is free of any kind liens or encumbrances.

In a bargain and sale deed also, a buyer does not get any protection from encumbrances. The grantee could get in trouble if it is found that title is defective because this deed does not guarantee a good title to the property. Therefore, in such circumstances grantee would not have any legal remedy against it.

Grant Deed:

A grant deed transfers the property along with any interest from the grantor to the grantee in exchange of money. One special feature of this kind of deed is that the interest of the property is transferred from the grantor to grantee for a previously agreed-upon price.

In addition to this, this deed also guarantees that the grantor owns the property without any kind of debts and is being sold free of debt; however, it does not provide a guarantee that the property is free of defects, unlike the warranty deed.

Fiduciary Deed:

This fiduciary deed is used to transfer property when the grantor is in a fiduciary relationship with the grantee, for example, a trustee, guardian, executor etc.

Trust Deed:

A trust deed is a kind of deed which transfers property to a trustee to secure an obligation such as a promissory note or a mortgage. This gives the trustee a right to sell the property in the case a default is made in the obligation.

Court Order Deed:

There are different kinds of court order deeds that are executed following a court order.  This includes deeds like sheriff’s deeds, master deeds etc. These kinds of deeds are executed without the consent of the owner. These deeds are made in a situation where the sellers can no longer pay for the house; hence, they are executed without their consent. One special feature of these court order deeds is that they mention the actual price of the real estate in advance as a consideration.

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by Shambhavi Tripathi

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