DEFINITION of 'Deed'

A deed is a signed legal document that grants the bearer a right or privilege provided that he or she meets a number of conditions. In order to receive a privilege such as ownership, the bearer must be able to do so without causing others undue hardship.

Deeds are most known for being used to transfer the ownership of automobiles or land between two parties.

BREAKING DOWN 'Deed'

A deed is the legal document that transfers a title to a new holder of a property. The use of a deed to transfer title must be filed in the public record by an entity such as an assessor’s office in order to make the document binding in the court of law. The deed is the vehicle for transferring a title but is not the title itself. The signing of a deed must be notarized and may require witnesses depending on state laws.

How A Deed Is Used To Transfer Ownership

A deed must be written. If it is not entered into the public record it is referred to as an imperfect deed. The document and the transfer of title is still valid but the related paperwork may need to be cleared up with the state if there is legal challenge to an imperfect deed.

The transfer of ownership can be muddled even when a perfected deed is filed. There could be a cloud on title for a variety of reasons. False deeds might be filed that require clearing up with record keepers. There may be probate issues with older properties where actual ownership is questionable. One way to resolve some of these matters to use a specialized deed called a quitclaim deed to be signed a person who holds some interest in a property to relinquish their claim to.

Conferring a title through a deed does not necessarily grant the new owner the right to use the property any way they choose. For example, an individual who signs a deed for a particular section of land has a legal right to possess that land but may not be able to build a shooting range on it because of the potential risk it would pose. In other cases, the holder of the title to a piece of property may be able to own the land but for environmental reasons would not be allowed to develop it.

Other types of documents that confer comparable privileges to deeds include commissions, academic degrees, licenses to practice, patents and power of attorney.

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