Property Transfer 101 The Common Means to Transfer Real Property Interests in Arizona

Property Transfer 101 The Common Means to Transfer Real Property Interests in Arizona

In Arizona, the most common types of deeds used to transfer an interest in real property are the general warranty deed, the special warranty deed, the quit claim deed and the beneficiary deed. As explained more fully below, the general warranty deed and the special warranty deed are used in most Arizona real estate law sales transactions to transfer the property. Quit claim deeds have no warranties, are more often used to clear up mistakes in title, or to change the estate in which the property is held (i.e., joint tenancy with right of survivorship, tenants in common, community property, etc.). Beneficiary deeds are used for estate planning purposes, to ensure that the property is transferred to the person(s) whom the owner desires, after the death of the owner, and without going through the probate process.

With a general warranty deed, the grantor (seller) warrants that he or she holds clear title to a piece of real estate and has a right to sell it to the grantee (buyer). The warranty is not limited to the time that the grantor owned the property, but extends back to the beginning of time. By providing a general warranty deed, a grantor warrants that (1) there are no hidden liens or encumbrances on the property (covenant against encumbrances); (2) that the grantor is the owner of the property and has the right to transfer it to the grantee (covenant of seisin); and (3) that if title ever fails, the grantor will compensate the grantee for any losses (covenant of quiet enjoyment or covenant of warranty). When one purchases a home a general warranty deed is probably the type of deed that they would receive from the seller.

A special warranty deed is similar to a general warranty deed. The difference is that with a special warranty deed, the grantor warrants the title against claims that arose only during the period of time that the grantor held title to the property, rather than from the beginning of time. For example, if the buyer purchased a home in 2000, but the buyer later learns that a deed back in the 1930's was forged, the buyer would have a claim against the seller under a general warranty deed but not under a special warranty deed (even if the buyer only had a special warranty deed, the buyer should still have a claim against the title company for the forged deed in the 1930's). This special warranty deed is used more frequently in commercial real estate transactions, but can also be used in the sale of any real property.

A quit claim deed was not originally designed to transfer property. As a practical matter, it has the power to transfer interests in property, but more accurately, the quit claim deed will "quit" or terminate any interest of the grantor in the property. If the grantor has no interest in the property, but quit claims it to another, the grantee receives nothing but a piece of paper. There are no warranties associated with a quit claim deed, which is why we recommend that it never be used to transfer a piece of property from a seller to a buyer of real estate.

A beneficiary deed transfers the grantor's interest in the property to whoever is designated as the beneficiary on the deed. However, the beneficiary deed transfers no current interest in the property. The grantee will only receive the property upon the death of the grantor, and only if the grantor has not issued a subsequent beneficiary deed, or recorded a revocation of the beneficiary deed. One of the benefits of the beneficiary deed is that the transfer occurs without the need to open probate. A beneficiary deed must be recorded prior to the death of the grantor to be valid. Although a beneficiary deed transfers upon death an interest in real property, its intended use is as part of an estate plan designed to maximize the amount of assets transferred to the intended heirs. clgz05

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