NORTH CAROLINA DEEDS

Simply put, a deed is the document that determines ownership of real property. A deed must be recorded at the county register of deeds whether the land is located, to convey ownership of real property.

The term “real estate” is more commonly used when discussing land and structures attached to land, and is generally synonymous with the term “real property”. The latter term is a bit more comprehensive as it also includes the legal rights associated with ownership of land, such as the right to use, sell, or lease the property. In a real estate sale, the term real property is also used to distinguish between what is attached to the land and will convey to the buyer upon purchase, such as a house on a foundation and the air conditioning unit, as opposed to personal property within the house, such a washer, dryer, or refrigerator. This distinguishment is important for buyers of real estate, because unless specifically stated in the purchase contract, only the real property is being conveyed with the purchase.

Deeds only convey real property and do not convey personal property. Since this article is dealing only with deeds, I will be using the terms real property, real estate, and property interchangeably.

Types of Deeds in North Carolina

The three different types of deeds used to convey real property are the General Warranty Deed, Special Warranty Deed, and Non-Warranty Deed (also known as a Quit Claim Deed).

General Warranty Deed

The deed used in the great majority of real estate transactions is a General Warranty Deed. When a General Warranty Deed is used, the grantor warrants, (promises), that the property is marketable, and that the grantee will hold title to the real property free and clear of any encumbrances. Examples of encumbrances might be a lien placed on the property by a contractor for unpaid labor, or an outstanding deed of trust (mortgage) still attached to the property. Should there be any issues with the grantee’s ownership interest, legal action can be taken against the grantor as a result of the warranty provided in the deed. As a purchaser of real estate, you want a seller to convey title to a property by a General Warranty Deed, as this type of deed gives you the most assurances that there will be no issues with the title (ownership interest) to your real property.

Special Warranty Deed

A Special Warranty Deed gives similar assurances as a Warranty Deed with respect to title being clear and marketable, however, it is not an absolute warranty as in a General Warranty Deed. The grantor in a Special Warranty deed is only providing a warranty that there are no title defects from the date the grantor became the owner of the real property, which is the date of their recorded deed, to the present. The grantor of a Special Warranty Deed is essentially saying that they did not create any title issues while an owner of the property, but they are not warranting that there are no title defects that arose prior to their ownership. If the grantor of a such a deed has owned the property for 10 years, then the grantor is warranting clear title for the past 10 years. If the grantor owned the property for 6 months, then they are warranting the property is clear of any title defects for the past 6 months. Builders often provide Special Warranty Deeds when selling new construction, and lenders that are selling property they own due to a foreclosure will also likely convey property with a Special Warranty deed.

Non-Warranty Deed / Quit Claim Deed

A Quit Claim Deed is a Non-Warranty Deed. A grantor conveying real estate with a Non-Warranty Deed is promising absolutely nothing with respect to the title, as the deed clearly states that no warranties, express or implied, are being made about the condition of title. There is no warranty that the property is free and clear of liens. There is no warranty of marketability. They are not promising that upon conveying the deed that the grantee will have a complete ownership interest to the property. A Non-Warranty Deed is merely conveying to the grantee the grantor’s interest in the real property, whatever that might be. Such a deed is rarely seen in a standard real estate transaction when a property is being purchased for market value. Examples of circumstances where you are likely to see a Non-Warranty Deed would be when a couple is getting divorced, and one party is being removed from the deed, or when an individual is deeding their property to a company they own.

Is Ownership of Real Property Affected?

Regardless of which deed has been used to convey the real property, the grantee could still own a 100% ownership interest, with all rights to use and convey the property. While language contained in a deed could alter the interest held in the property, such as the percentage of ownership, or a life estate interest, the type of deed used in the transfer is just reflecting the warranties provided by the grantor to the grantee.