What is a Deed? How to Use Deeds to Transfer Real Estate

What is a Deed?

A deed is a written instrument that transfers the title of property from one person to another. The exact deed form needed to legally transfer title will depend on the laws of the state where the real estate is located. The use of an incorrect form—or of incorrect language in a form—can result in unintended consequences, including a failure to effectively transfer title or the creation of future title issues.

Relationship of Deed to Title

Many people are confused by the relationship between a property deed, on one hand, and a property title, on the other. The deed is the written, legal document that transfers ownership rights in the property to another party. The title is the ownership rights in the property that are conferred by the deed. The deed is the physical representation of the abstract title ownership that the property owner is said to possess.

Parties to a Deed

For a deed to be valid, it must identify the parties. There will always be at least two parties to a deed: the person transferring the property and the person receiving the property.

• Current Owner (Grantor). The current owner of the real estate is called a grantor. The grantor is the person or organization that is transferring the real estate. The grantor must sign the deed.
• New Owner (Grantee). The person who will own the property after the transfer is called a grantee. The grantee is the person or organization that receives the real estate. In a sale of real estate, the buyer is the grantee.

Some deeds—known as Life Estate Deeds or Lady Bird Deeds—involve three parties: the grantor, the life tenant, and the remainder beneficiary. The life tenant and remainder beneficiary are both grantees, but they take title at different points in time.

• Current Owner (Grantor). As with all deeds, the grantor is the current owner who will transfer the property.
• New Owner (Life Tenant). The life tenant acquires the property from the grantor, but holds it only for his or her lifetime. The life tenant is one type of grantee.
• Future Owner (Remainder Beneficiary). The remainder beneficiary (commonly known as a remainderman) acquires the property at the death of the life tenant. The remainder beneficiary is another type of grantee.

In most deeds prepared for estate planning purposes, the grantor will also be the life tenant/grantee. See our discussion of Life Estate Deeds for a more detailed overview. If you want to know more about Lady Bird Deeds (also called Enhanced Life Estate Deeds), see our discussion of Florida Lady Bird Deeds and Texas Lady Bird Deeds.

With Transfer-On-Death Deeds (also known as Beneficiary Deeds), the grantees are often referred to as beneficiaries. Transfer-On-Death Deeds are beginning to replace Life Estate Deeds in many states, including Texas and California.

Here are a few guidelines to help keep these parties straight:

• There may be more than one grantor if there is more than one owner. For example, if a husband and wife own real estate together, both of them can sign the same deed to transfer real estate to someone else. In that situation, both the husband and wife would be grantors.
• Similarly, there may be more than one grantee. A father may convey property to his five children, making each child a grantee.
• The grantor can be one of the grantees. If, for example, a father wanted to transfer real estate to himself and his children, the father would be both a grantor (since he is the current owner) and a grantee (since he will still have ownership after the transfer, although in a different form). See How to Add a New Owner to the Title Deed to Real Estate for more information about adding a new owner.
• Grantors and grantees need not be people. Businesses, trusts, estates, nonprofit organizations, churches, or other organizations can serve as grantor or grantee.
• In some situations, someone who is not listed as a current owner on the prior deed may have to sign as a grantor. This often occurs in states with laws that give a spouse an interest in the marital home. If a spouse’s signature is required to transfer real estate, the spouse may sign the deed as a grantor even though he or she is not listed as an owner on the prior deed.

Other Elements of a Deed

In addition to identifying the parties, each deed has other requirements it must meet in order to validly transfer the property. The exact elements of a deed may differ depending on the laws of the state in which the real estate is located. But a few common elements are used in most states:

• Grantor’s Name and Signature. The grantor must sign the document in front of a notary and have the signature notarized. Some states—like Florida—also require the grantor’s signature to be witnessed by two witnesses.
• Grantee’s Name. The deed must identify who or what organization will receive the real estate. The correct legal name should be used. If the deed will be to a business, the deed should identify the type of business and state of formation (for example, “Acme LLC, a Florida limited liability company”). Similarly, if the grantee is a trust, the deed should state the legal name of each trustee, the name of the trust, and the date that the trust was created.
• Manner in which Multiple Grantees Will Hold Title. If there is more than one grantee and all grantees are individuals, the deed should specify how the grantees will hold title (form of co-ownership). Options vary by state and could include joint tenants with right of survivorship, tenants in common, tenants by the entirety, or community property.
• Recitation of Consideration. A recitation of consideration is simply a statement that something of value was given in exchange for the real estate. In most states, it is no longer necessary for value to be transferred or for the deed to recite that consideration was paid. Nonetheless, many deeds still have a recitation of value, such as “for and in consideration of the sum of $10.00” or something similar.
• Legal Description of Real Estate. The deed must adequately identify what real estate is being conveyed. A well-prepared deed will usually contain a surveyor’s description of the real estate or a reference to the subdivision plat or other legal instrument. The best practice is usually to copy the legal description from the prior deed. The description is usually set off in block text and contains legal language identifying the real estate. That same language can usually be dropped into the new deed. See our discussion of legal descriptions for more information.
• Language of Conveyance. The deed must make it clear that it is intended to convey the real estate. The exact words may differ from state to state and depending on warranties of title—whether or not the deed is a quitclaim deed other form of deed. Typical language may include words like assign, transfer, convey, give, or quitclaim.
• Statement of Exceptions. Some deeds will list a few exceptions—matters that are not affected by the transfer of real estate. For example, the deed may state that the real estate is “subject to” all governmental rights-of-way on the real estate. These exceptions are really disclosures to protect the grantor from liability.
• Date. The date may not be required by law, but it is usually included. The date can be very important for establishing the chain of title.
• Acknowledgment by Notary Public. Most deeds must be acknowledged by a notary public.
• Recording Information. When the deed is recorded in the land records, the clerk or other official will usually stamp the deed to show when and where it was recorded. This puts third parties on notice that the real estate has been transferred and protects the grantee from claims against the title to the real estate.

Although most states require the deed to be delivered to the grantee, there is usually no requirement that the grantee sign the deed. As long as the deed is signed, notarized, and recorded, the grantee will be presumed to have accepted the deed.