All About Property Deeds in Massachusetts
If you’re preparing for an upcoming real estate transaction, you may be curious about property deeds and how they work. Simply put, a property deed is a document that legally transfers ownership of a property from one individual to another (typically from the seller to the buyer).
However, there is more to understand regarding property deeds in Massachusetts. In fact, there are a few different kinds of deeds, and they operate in unique ways. When planning to purchase or sell a property, it is crucial to understand these deeds, the components, and the safeguards they may (or may not) offer.
Essential Components of a Deed
To appreciate what a property deed is and how it works, it’s important to understand the essential components of a deed. Typically, the following elements must be present within the deed for it to be legal:
1. The grantor (seller) and the grantee (buyer) must be listed on all property deeds in MA. Even if the property is being transferred as a “gift,” both names must be listed. The grantee’s mailing address, as well as the address of the property, must be printed on the deed as well.
2. The purchase amount, or the consideration, must be included within the deed. If the property is being transferred WITHOUT monetary exchange, the “consideration” is usually registered as $1.00.
3. Both words of grant and covenants must be included – this means that the seller is conveying the title to the buyer and that certain promises of the condition of the title are granted.
4. A description of the property is required on the deed. This usually includes the municipality where the land is located and other important details.
5. A statement, or title reference, of how the grantor became the property’s owner must be incorporated within the deed.
6. The date of execution and grantor’s signature must also be included on the property deed for it to be legal.
7. Acknowledgement and recording are the last parts of the deed. A notary public must acknowledge the seller’s signature, and the deed then has to be recorded at the registry of deeds.
The 3 Types of Property Deeds in MA
In Massachusetts, three different deeds are used in real estate transactions. They all have unique purposes and offer various levels of protection for the buyer.
● Quitclaim Deed
This type of property deed is most commonly used in Massachusetts. A quitclaim deed guarantees that the seller has complete ownership of the property listed on the deed: The term for this is fee simple.
This deed ensures that the home or property has no encumbrances from the grantor, such as liens or easements. Not included are encumbrances specifically listed on the deed OR any future encumbrances incurred. Also, preexisting encumbrances (such as restrictions set by the municipality and encumbrances that occurred BEFORE the grantor’s ownership) are not covered.
Next, a quitclaim deed assures that the seller of the property has the legal right to transfer the property to the buyer. And lastly, with this kind of deed, the seller guarantees that he (or she) will defend against any potential title claims from when he owned the property.
Speaking of title claims, it is also important to purchase title insurance on your new property, which safeguards you against any possible title claims while you own the home. Title insurance works by covering potential losses you may encounter if someone tries to challenge ownership of your new property.
● Warranty Deed
For home purchases, warranty deeds usually offer the highest level of protection for the buyer. The warranty deed is similar to the quitclaim deed, but there are a couple of differences.
A warranty deed ensures no PREEXISTING encumbrances (including encumbrances incurred before the seller owned the property).
Also, with this type of deed, the seller guarantees that he will defend against any potential title claims from when he owned the property, but his guarantee also covers the time BEFORE his ownership of the home.
● Release Deed
The release deed, or a fiduciary deed, provides the least amount of protection for the buyer. In a nutshell, release deeds do not guarantee or promise anything. This deed simply transfers the title and the grantor’s ownership rights to the grantee. There are no assurances that the title is legitimate, so there are really no protections for the buyer whatsoever.
So, for instance, if a buyer takes ownership of a property, and later an individual attempts to claim the property as part of his “long lost inheritance,” the buyer will have NO legal standing against the previous seller.
A seller may try to transfer the title with a release deed if the scope of his ownership is not clear, the seller’s interest in the property is questionable, or there is a cloud on the title (such as a lien on the property or some other type of encumbrance).
It is important to note that if a deed is incomplete or missing any provisions, it may not be legally binding. It is also crucial to use the proper deed for your unique situation. For these reasons, when you are buying or selling a property, you need a knowledgeable real estate attorney in your corner.
Reach out to The Law Offices of Jessica L. Albino today – she will ensure that all documents pertaining to your real estate transaction, including the property deed, are accurate, complete, and fit your needs exclusively.