In Florida, a Deed is required to transfer ownership of a piece of property, regardless of whether that property consists of buildings or vacant land. Contrary to popular opinion, the title to the property is not conveyed by the Mortgage in Florida (the Mortgage creates a lien on the property).
What does a Deed specifically do?
In common law, a deed is any legal instrument in writing which passes, affirms, or confirms an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions, sealed. As you may expect, what sounds like a simple transference can become overtly complicated. You may need the property to transfer in a specific way. That is why there are different types of deeds that can accomplish a variety of objectives.
What is the Difference Between a Deed and Title?
A deed is a physical document that conveys ownership of a property, while a title refers to the concept of ownership rights. One illustration people use to understand this concept is the idea of owning a book. You can own a physical copy of a book, but you cannot own a physical copy of the title. The title is a concept, whereas the book is something physical. In this way, a deed is a physical item that you must have after you purchase property.
Why are there multiple types?
The different types of deeds exist to account for what the grantor can convey, what the grantor wants to convey, and what warranties the grantor wants to be encompassed within. The types of deeds we see most often are the general warranty deed, the special warranty deed, the quitclaim deed, and the ladybird deed. Each of these deeds have a diverse range of conveyance, and depending on your objectives, you will want to narrow it down to the one that matches your goals.
There are five (5) main types of Deeds in Florida that will be addressed in this article: (1) Warranty Deed; (2) Special Warranty Deed; (3) Quitclaim Deed; (4) Life Estate Deed; and the (5) Enhanced Life Estate Deed (Lady Bird Deed). Each of these Deeds have different affects that come with each of these Deeds, and it is important to know when receiving a property what type of title you will be receiving.
A Warranty Deed provides a full warranty of title that extends all the way through the chain of title, including the period before the grantor/seller owned the property. The general Warranty Deed is the most common type of Deed to transfer residential property in Florida and is most likely the type of Deed that you will find at the closing table of a home purchase or sale. The general Warranty Deed is considered the top tier Deed for ownership of a property.
A Special Warranty Deed transfers limited warranty of title to the grantee. This particular type of Deed guarantees that there are no defects or problems with the title during the time period grantor’s/seller’s ownership but makes no promises about the condition of the title before the seller owned the property. Special Warranty Deeds are considered the mid-tier Deed for ownership, second to the Warranty Deed. In Florida, a Special Warranty Deed is most often used to transfer commercial properties, and while it is available in a residential transaction, it is uncommon. If you are being offered a Special Warranty Deed from a residential seller, inquire as to why they are unwilling to convey a Warranty Deed.
A Quitclaim Deed passes the ownership interest in real estate to the new owner but makes no warranties regarding any defects or problems with the title. A Quitclaim Deed is the least desirable Deed to accept ownership of a property in Florida. The Quit Claim Deed is comparable to a used car dealership offering a used car, “as-is.” Once you drive it off the lot, or in this case, once you accept the Deed, you are stuck with any issues the property may have. In Florida, Quitclaim Deeds are often used to transfer property between family members, an individual to an LLC, an individual to a trust, or spouses in a divorce, among other reasons. Quitclaim Deeds often create exceptions to title policies, and are a tool used by owners to get rid of properties that may not otherwise qualify for conventional financing or title insurance. If you are not an expert at identifying risks and liabilities in the property’s chain of title, you should be very careful purchasing a property via Quit Claim Deed.
A Life Estate Deed is a grant of an ownership interest in a property, whereby the Grantor gives away true legal title and ownership to another person, while retaining the ability to use the property for the rest of their lifetime. At the execution and deliverance of this type of Deed, the Grantee becomes the fee simple remainderman, and the Grantor becomes a life tenant in the property. A house that is Deeded away via a Life Estate Deed bypasses the probate process and passes to the remainderman in fee simple at the death of the life tenant. Life Estate Deeds create a life estate in the person who granted the Deed and said life tenant is bound by the decisions of the remainderman as to whether they can sell, convey, or encumber the property. What this means is that if you grant your children a Life Estate Deed, and you live for another five years, for that five-year period you are no longer entirely in control of your property, nor would you be entitled to any of the money if you sold the property. You have a life interest, meaning you can stay there for your life but effectively the children would be the owner of the property and any decisions concerning the property would have to be approved by them.
Also known as a Lady Bird Deed, an Enhanced Life Estate Deed is a special form of Deed that allows an owner to Deed the property to the beneficiary(ies) of their choice, but the Deed does not become effective until the death of the Grantor. This type of Deed is only available in a handful of states, and Florida is one of them. This allows the Grantor to revoke the Deed before their death, create a new Deed, sell the property, take out a mortgage, or any other activities conveying or encumbering title to the property, whereas a traditional life estate requires the Grantor to get consent from the Remainderman. This is a Deed used in estate planning where the owner wants to retain the ability to change their mind and this type of Deed allows the property to pass to the beneficiaries at the time of death of the Grantor, bypassing the probate process in Florida. This Deed is almost always recommended when a parent is looking to add their child to a deed “just in case something happens.”
Does a Mortgage Convey Title?
This is a point of confusion that we often see. A mortgage does not convey title. For that, you will need a deed. The reason we like to make the distinction is because many times, individuals might think that a mortgage does convey title, but it does not. A mortgage is a loan on the property itself, and it is the deed that will convey title and ownership of the property. They are separate entities with interlocking components, and believe it or not, there are absolutely different types of mortgages. The best way to look at it: a mortgage is not a deed, and a deed is not a mortgage.
Conclusion
There are quite a few different types of Deeds in Florida, and this article is certainly not an exhaustive list. The Deed that is right for you will depend heavily on the specific facts of your situation. Reach out to us today if you would like to discuss which type of Deed you are looking for!
The attorneys at The Orlando Law Group represent property owners, prospective property owners, developers, contractors, lenders, investors, real estate agents, brokers, landlords, tenants and more throughout Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout central Florida.
If you are dealing with a real estate issue or looking for some preventative real estate legal services, please reach out to our office at 407-512-4394, fill out our online contact form.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.
Last Updated on February 1, 2023 by The Orlando Law Group
February 1, 2023 / by The Orlando Law Group