Types of deeds compared: general warranty, special warranty, bargain and sale and quitclaim

The four deed types, ranked by the promises they make

A deed is the written document an owner (the grantor) signs to transfer real property to someone else (the grantee). Title is the ownership itself; the deed is the paper that carries it from one person to the next. Every deed transfers whatever interest the grantor has. What separates the types is the set of promises, called covenants or warranties, that the grantor makes about the title. More promises mean more protection for the buyer and more exposure for the seller.

PSI lists "Types of deeds" by name as the first item under Transfer of Title, which is 6 percent of the national portion. The same section covers title insurance, when ownership transfers, recording and closing. Most deed questions come down to one thing: which deed protects the buyer against which problems, and for what period of time.

Notice that special warranty and bargain and sale with covenants sit at almost the same level. Both protect the buyer only against problems the grantor created. For exam purposes, treat both as the "middle" option between general warranty and quitclaim.

General warranty deed: the most protection

In a general warranty deed, the grantor guarantees the title against defects from any time in its history, not just while the grantor owned it. If a forgotten lien from three owners ago turns up, the buyer can look to the grantor. Textbooks usually list these six covenants:

• Covenant of seisin: the grantor owns the property and the estate being conveyed.
• Covenant of right to convey: the grantor has the legal power to transfer it.
• Covenant against encumbrances: there are no liens, easements or other encumbrances except those stated in the deed.
• Covenant of quiet enjoyment: no one with a better title will disturb the grantee's possession.
• Covenant of further assurance: the grantor will sign any additional documents needed to perfect the title.
• Covenant of warranty forever: the grantor will defend the title against all lawful claims, forever.

Textbooks vary slightly, and some list five by folding the right to convey into seisin, so know all six names. New Jersey's statutory general warranty runs to the grantee and the grantee's "heirs, representatives and assigns" against the claims of all persons, which is why general warranty is the answer whenever a question asks which deed gives the grantee the greatest protection.

Special warranty and bargain and sale deeds

A special warranty deed narrows the promise to the grantor's own time. The grantor says, in effect, "I will defend the title against anyone claiming through me, but I am not answering for owners before me." That limited promise suits a seller who knows little about the property's history, such as a lender selling a foreclosed home or an executor selling for an estate.

A bargain and sale deed transfers the property and, under the general rule, implies that the grantor holds title. On its own it carries no warranties against defects. A bargain and sale deed with covenants adds a promise, most often a covenant against the grantor's acts: the grantor has done nothing to encumber the property. The buyer gets protection for the grantor's period of ownership, and nothing earlier.

Think of it as three questions. Does the deed imply the grantor owns the property? Does the grantor promise anything about defects? If so, for which period? A bargain and sale deed without covenants answers yes, no and none. With covenants, it answers yes, yes and only the grantor's period.

New Jersey's statutory deed covenants in plain words

New Jersey does something many states do not. Chapter 4 of Title 46 gives a short form deed and then defines short phrases a deed can use, so a few words carry a long, fixed legal meaning. The short form itself is simple: the date and the parties, a statement of the consideration, the words "grant and convey," a description of the property with any covenants, and the grantor's signature. The statute does not create named deed types; it supplies the wording, and the covenants a deed includes decide how much it promises.

Two links to note. Under N.J.S.A. 46:4-9, writing "with general warranty" or "with special warranty" in the granting clause has the same effect as the full covenant. And the covenant as to grantor's acts in 46:4-6 is New Jersey's statutory name for what textbooks call a covenant against grantor's acts. Pair it with a bargain and sale deed and you have a bargain and sale deed with covenant as to grantor's acts. Its reach is the grantor's own conduct, which lines up with the middle rows of the table above.

There is a small difference in wording worth knowing for a real closing, though not for the exam. The special warranty in 46:4-8 protects against claims made through the grantor, while 46:4-6 covers acts the grantor did, signed or knowingly allowed. If a client asks what a particular covenant does for them, that is a question for their attorney.

Quitclaim deeds: no promises at all

A quitclaim deed transfers whatever interest the grantor has, if any, and makes no promises. It does not even imply that the grantor owns anything. If the grantor owns the property outright, the grantee gets it outright. If the grantor owns nothing, the grantee gets nothing and has no claim under the deed.

Quitclaims are used to clear up title, not to sell homes to strangers. Common examples: removing an ex-spouse's name after a divorce, releasing a possible claim that shows up as a cloud in a title search, or correcting a misspelled name. A spouse or co-owner adding or removing someone can also change how title is held, which is covered in our post on tenancy in common and joint tenancy.

What makes a deed valid: delivery and acceptance

The general rule tested on the national portion lists these essentials for a valid deed:

1. A grantor with legal capacity: of legal age and mentally competent.
2. A grantee who can be identified. The grantee does not need to be competent and does not sign the deed.
3. A recital of consideration. It can be nominal, such as $1. In New Jersey the true price must be stated for recording; see below.
4. A granting clause with words of conveyance, such as "grant and convey."
5. An adequate legal description of the property.
6. The habendum clause, if used, which describes the estate being transferred ("to have and to hold").
7. The grantor's signature.
8. Delivery by the grantor and acceptance by the grantee during the grantor's lifetime.

Delivery is about intent. The grantor has to intend the deed to take effect now, and give up control of it. A deed signed and left in the grantor's desk drawer, to be handed over "when I die," has not been delivered. Acceptance by the grantee is usually presumed when the transfer benefits them. Under the general rule, title passes on delivery and acceptance, not when the deed is recorded.

Acknowledgment is a formal declaration before a notary or other authorized officer that the grantor signed voluntarily. Under the general rule it is not needed for the deed to be valid between the parties, but it is needed to record. New Jersey's acknowledgment statute, N.J.S.A. 46:14-2.1, requires the officer to certify that the maker appeared and confirmed signing as their own act, and it now allows remote appearance by communication technology. New Jersey also does not require a seal: under N.J.S.A. 46:26A-3(b), a document need not be executed under seal or say anything about sealing.

Recording in New Jersey: notice, not ownership

Recording puts the deed in the public land records with the county recording officer. It protects the grantee by giving notice to the world, which is called constructive notice. It does not create ownership. Exam questions love that distinction.

New Jersey's recording law says this directly. Under N.J.S.A. 46:26A-12, a recorded document gives notice to later purchasers, mortgagees and judgment creditors from the time of recording. Subsection (c) says a deed is "of no effect" against later judgment creditors without notice, and against later good-faith purchasers and mortgagees for value without notice whose own deed or mortgage is recorded, unless the earlier deed was recorded first. In plain terms: if you do not record, someone who buys later without knowing about you, and records before you do, can win.

For a deed to be accepted for recording in New Jersey, N.J.S.A. 46:26A-3 requires that it:

• Be in English or come with an English translation.
• Be signed, with each signer's name printed beneath the signature.
• Be acknowledged or proved as Title 46 provides.
• Reference the lot and block on the municipal tax map (or the property's account number), with "part of" when the lot has been subdivided, or say that no number has been assigned.
• Include the name of the person who prepared the deed.
• State the grantee's mailing address.
• Meet the consideration rules of N.J.S.A. 46:15-6.

That last item matters. Under N.J.S.A. 46:15-6, when the transfer is subject to the realty transfer fee, the deed (or its acknowledgment, proof or an affidavit by a party attached to it) must contain a statement of the true consideration. If the transfer is exempt, an affidavit stating the basis for the exemption must be attached. A deed for new construction must say "NEW CONSTRUCTION" in capital letters at the top of the first page, with the grantor's affidavit attached. So in New Jersey, a nominal "$1 and other good consideration" recital does not satisfy the recording rules for a sale.

The realty transfer fee is paid when the deed is recorded

New Jersey charges its realty transfer fee at the moment the deed is offered for recording. Under N.J.S.A. 46:15-7, the grantor pays it to the county recording officer, on top of the ordinary recording fees, and it is figured per $500 of consideration. The Division of Taxation states it plainly: the State imposes the fee "on the seller of real property." When the consideration is more than $1,000,000, certain property classes (including Class 2 residential) also owe a Graduated Percent Fee, and the Division says the seller is responsible for that too.

Some transfers are exempt. The Division's list includes consideration under $100, transfers between husband and wife or parent and child, deeds that only confirm or correct an earlier recorded deed, and deeds recorded within 90 days after a divorce decree between the grantor and grantee. The seller claims an exemption on the Affidavit of Consideration for Use by Seller (Form RTF-1). To practice the arithmetic, use our realty transfer fee lesson.

Which deed will you see at a New Jersey closing?

The type of deed is a term of the sales contract. Under the general rule, the contract says what kind of deed the seller must deliver, and the seller cannot substitute a weaker one at closing. For anything about which deed a particular client should give or accept, the answer belongs to the attorneys in the deal.

We looked for an official New Jersey source that says which deed is standard in residential sales and did not find one, so we will not state one as a rule. What the statute does show is that New Jersey gives ready-made language for each promise, including the covenant as to grantor's acts that pairs with a bargain and sale deed. For the exam, stick to the national ranking above. The NJ-specific points PSI could test, and that a licensee should know, are the recording requirements and the realty transfer fee.

How the exam asks about deeds

• "Which deed gives the grantee the greatest protection?" General warranty. "The least?" Quitclaim.
• "Covers only the grantor's period of ownership" points to special warranty or bargain and sale with covenants.
• "Makes no warranties but implies the grantor holds title" is bargain and sale without covenants.
• "When does title pass?" On delivery and acceptance, not on signing and not on recording.
• "What does recording do?" Gives constructive notice and protects against later buyers. It does not transfer title.
• "Who signs the deed?" The grantor. The grantee does not need to sign.
• Watch for "quitclaim transfers nothing." Wrong: it transfers whatever the grantor has, without promises.

For the rest of this topic, including title insurance and closing, work through transfer of title in the study guide, then test yourself on a full practice exam.