At the core of the real estate transaction is the deed. The deed is the all-important legal document that conveys ownership or interest in real property (for example, a house or a lot) from one person to another.
However, not every deed offers the same protection to a buyer; some deeds offer “warranties” of title, (i.e. protections for the buyer), and some don't. This can have far-reaching implications for both buyers and sellers. The state of Colorado statutorily recognizes four main types of deeds: (1) General Warranty Deeds, (2) Special Warranty Deeds, (3) Quitclaim Deeds, and (4) Bargain and Sale Deeds. C.R.S. § 38-30-113.
Before you read the below discussion of the different types of deeds, also consider these important Colorado-specific regulations:
- As of January 1, 2019, when filling out the “Colorado Commission Approved Contract to Buy and Sell,” there will be boxes to check to specify the type of deed: general, bargain and sale, quit claim, personal representative's deed, or _____ “blank” (other). If no other type of deed is specified, the form will defaults to a special warranty deed.
- Warranties are subject to “statutory exceptions,” meaning that Colorado legislature has identified the following types of title issues and found that no matter what the type of deed is, sellers will not be liable for: (1) real estate taxes for the year of conveyance and subsequent years; (2) matters disclosed, or which would be disclosed, by a land survey if one were done; (3) matters recorded in the public records. C.R.S. §38-30-113(5)(a).
- General Warranty Deeds
With a general warranty deed (or just “warranty deed”), the seller promises to protect the buyer against any adverse claims on the real property from the beginning of time (the seller gives a “warranty” of title). This is the best case scenario for the buyer, because if a title issue arises from an owner prior to the seller, the seller of the property will need to pay to defend against the claim. Title issues like this can arise out of prior liens on the property, or long-standing interest disputes. Please note that per C.R.S. §38-30-113, discussed in the above section, sellers will not be liable for certain statutory exceptions.
- Special Warranty Deeds
With a special warranty deed, the seller promises to protect the buyer against any adverse claims on the real property in the time the seller owned it, but is not obligated to defend against defects in the title from before that time period. Remember: this is the new “default” deed in Colorado for real estate transactions, effective January 1, 2019. Please note that per C.R.S. §38-30-113, sellers will not be liable for certain statutory exceptions.
- Quitclaim Deeds
With a quitclaim deed, the seller promises that they are transferring whatever interest the seller currently has in the property to the buyer, with no promises or warranties. A property being sold via a quitclaim deed is more or less sold as-is, and a buyer will be responsible for any defects in the title, no matter when the defects arose.
- Bargain and Sale Deeds
With a bargain and sale deed, the seller promises they are transferring whatever interest the seller currently has in the property, and whatever interest the seller later acquires in the property. This is typically not a warranty deed (meaning there are likely no promises regarding title issues) unless specified in the deed itself, and this type of deed is uncommon in a typical residential transaction. Personal representative's deeds, treasurer's deeds, trustee deeds, and guardian deeds often fall under the umbrella of bargain and sale deeds.
The information contained on this blog is intended to be general information only and not legal advice. This blog topic is not intended to be fully comprehensive. For these reasons, we suggest you seek a licensed attorney to help you review your documents. If you have any questions about the contents of this blog or if you need legal advice regarding your project, please contact the Beavers O'Connell Group at (720) 538-0363 or contact the firm on BOG's Contact Us page.