Warranty deed--need to use an attorney?

[Bienes Raices]

The consensus seems to be that a WD is better than using a quitclaim. Is this something I need to pay an attorney to do or is it fairly straightforward and something I could do on my own to save money?

[Keith Barton]

This post will be long, but there are a number of issues I want to clarify....

§1 DEED TYPES (there are more than 2 types of deed, but I am only discussing 2....)
A)
Warranty Deed - The grantor of a warranty deed warrants (guarantees) the title to the property is good: nobody else has rights in the property. If a 3rd party claims the 3rd party has a right to the property, which right has an impact on the new buyer's ownership of the property, the grantor agrees to defend the new owner against the claim of the 3rd party.

While all that is technically required is that the grantor makes a guarantee, in practice, that guarantee is in the form of an insurance policy that is purchased. The insurance company agrees to hire an attorney to defend against any 3rd party claims. The insurance company protects its butt (technical legal phrase there) by only issuing a policy if a licensed insurance agent certifies a proper title search was done and the agent determines there are no legally valid claims that can be made against the title. This is more commonly known as a "title search" or "title exam"; and, it is performed by a "title agency".

Warranty Deeds are required by lenders that are given a mortgage to secure repayment of the loan that was used to purchase the property. Many people don't realize that there are 2 types of title insurance policies: 1 only protects the lender - so as soon as the loan is paid off and the mortgage is realesed the owner cannot make a claim on the insurance policy; 1 protects the owner's title so the owner can make a claim on the insurance policy anytime anyone tries to assert interest in the property

Please Note - just like any insurance policy, there are "exclusions" or things the policy will not protect against. When the policy is issued, the exclusions will typically specify that the policy only protects up to a certain dollar value, the policy will not protect against tax liens, any existing right of way, easement, special assessments, etc.... Also, the policy will never protect against any change in the title that takes place after the policy is issued (e.g., the new owner has work done and a contractor places a mechanic's lien on the property, the new owner grants a utility easement, etc....)

B)
Quitclaim Deed - The grantor gives up any and all rights the grantor has to the property and transfers those rights, WHATEVER THOSE RIGHTS ARE, to the new owner. The grantor makes NO GUARANTEE WHATSOEVER about any rights in the property. Quitclaim deeds are most commonly used in a divorce (1 spouse transfers all rights in the property to the spouse who will keep the house), when transfering property to a living trust, transfering property between companies owned by the same person(s), or transfering property from an individual to a company owned by the individual. In these situations, the "old" owner had a warranty deed and the "new" owner has a close enough relationship with the "old" owner that the "new" owner is not worried about anyone asserting a claim since the title insurance was issued on the warranty deed (and in some instances like the living trust, the "new" owner still has the same rights to the guarantee of the warranty deed.)

§ DEED RECORDATION
Each state has its own laws about the requirements of a deed to real property. For example, in Ohio (see R.C. 5301.01):

To be valid, a DEED must be:
i) signed by the grantor;
ii) the grantor must acknowledge the signature before an official (a judge, a clerk of court, a county auditor, a county engineer, a mayor, or a notary public)
iii) the official shall certify the acknowledgement and sign a certificate of acknowledgement

Note - a properly signed (but not recorded) deed is a valid transfer of real property - HOWEVER, without recording, there is little protection against 3rd party claims against the property - (I've seen cases where people sold the same piece of land to different buyers!)

In Ohio at least, it is not required that an attorney create a deed. It is not required that an attorney file a deed. Whether a warranty deed or a quitclaim deed is used does not matter for purposes of legally transferring property. However, do something wrong and you may have unintended and/or negative consequences so I always recommend you consult a local professional to give you guidance....