What Is a Deed?

A deed is a signed legal document that grants its holder specific rights to an asset—provided that he or she meets a number of conditions. They are most commonly used to transfer the ownership of automobiles or land between two parties.

Key Takeaways

  • A deed is a signed legal document that transfers the title of an asset to a new holder, granting them the privilege of ownership.
  • The deed is the vehicle for transferring a title and is not the title itself.
  • If the deed is not written, notarized, and entered into the public record it could be vulnerable to legal challenges.
  • The transfer of ownership can be muddled even when a perfected deed is filed.

How a Deed Works

The purpose of a deed is to transfer a title, a legal document proving ownership of a property or asset, to another person. For the document to be binding in a court of law, it must be filed in the public record by a local government official tasked with maintaining documents. The signing of a deed must be notarized and may require witnesses depending on state laws.

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

The register of deeds is available for public viewing and is usually maintained on the county, town, or state level.

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

Types of Deeds

There are many different types of deeds, each of which serve different purposes. They are generally categorized in the following ways:

  • Grant Deeds: These contain two guarantees: That the asset has not been sold to someone else and that it is not burdened by any encumbrances, such as outstanding liens or mortgages, that have not already been disclosed. These types of deeds do not necessarily need to be recorded or notarized, although it is generally in the best interests of the grantee to ensure that this is done.
  • Warranty Deeds: This document provides the greatest amount of protection. It offers the same guarantees as a grant deed, together with a promise that the grantor will warrant and defend the title against claims.
  • Quitclaim Deeds: Releases a person's interest in an asset without stating the nature of his or her interest or rights. The grantor could be a legal owner or not and makes no promises. Quitclaims are usually used in divorce situations. 

Limitations of Deeds

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. Alternatively, there may also be probate issues. For example, if the owner of a property passed away without defining in a will who should gain control of his or her estate, heirs might challenge each other in court for the property title.

Moreover, 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.