Understanding Real Estate Deeds
As an estate planning attorney, I spend a lot of time reviewing deeds to real estate. The laws regarding real estate ownership and transfer are archaic and lead to confusion for many property owners. Perhaps the Q & A format below will help you.
Q: What exactly is a deed?
A: A deed is a written legal document that is used to transfer interests in real estate (also called real property as opposed to personal property). If you review your deed, you will find some key information, including the following: a grantor (seller or transferor), a grantee (buyer or transferee) and a legal description of the property.
Q: Are there different types of deeds?
A: Yes. Here are the most common types of deeds you are likely to run across: Quit Claim Deed – In this deed the seller/transferor does not guarantee that they own 100% interest in the real estate, but does guarantee that they are transferring all of the interest they do own. Warranty Deed – As the name suggests, the seller/transferor uses this deed to warrant or guarantee that they own 100% unencumbered interest in the property they are transferring. This is the preferred deed for a buyer/transferee in an arm’s length transaction. The buyer will want a guarantee that they are the only owner on the purchased property. Ladybird Deed – Supposedly named after Ladybird Johnson, this deed is technically called an Enhanced Life Estate Deed. It is used in Michigan to name beneficiaries on real estate to avoid probate. When used properly, it also can provide protection in Medicaid eligibility planning.
Q: Who is in possession of the deed to my home?
A: Likely you have the deed (even if you may not know it). When you purchased your home, with or without a mortgage, the deed was supposed to be recorded and then sent directly to you shortly after the closing. Many people mistakenly think that they are not given the deed to their home until they pay off the mortgage. Not true! You are given the deed up front even with a mortgage. On the other hand, if you purchase real estate with a land contract (essentially, financing from the seller), then you will not be given the deed until the last payment is made on the land contract. The deed is typically held by a third party during the term of the land contract (“held in escrow”). Mortgages and land contracts are two different animals.
Q: What if I cannot find my deed?
A: Don’t worry, a legal copy of your deed is probably recorded with the Register of Deeds in the county you live in. In fact, almost no one will ever ask you for your original deed. Instead, future buyers and their title companies will rely on what is recorded at the Register of Deeds.
Q: How do I get a copy of my deed if I cannot find it?
A: Contact the Register of Deeds in your county and ask them for a copy of the most recent deed recorded on your address. You can also get a copy of your deed online through the county website in most cases. There will be a small fee. Do not rely on information from the assessor’s office. They have information about your property for tax purposes, but not technically for ownership.
Q: Is there anything special about a deed that shows ownership by a married couple?
A: In Michigan, yes there is. If both spouses’ names are on the deed with language that indicates that they are married, then they own it as “tenants by the entireties” which provides some lawsuit protection if only one of them is sued. Property owned as tenants by the entireties cannot be separated to pay a claim against only one of the spouses. If both spouses are sued, then the property does not have that protection.
I hope the information above clarifies some important points concerning ownership and transfer of real estate. A complete mastery of real estate law is very difficult. I owe much of my understanding of real estate law and, for that matter, my approach to breaking down complex legal issues, to my favorite law school professor, Jeffrey Lanning. Professor Lanning once called on me in his Real Property class to ask about a real estate issue in a case and said: “Mr. Saunders, what’s the answer and then tell me why you’re wrong.” He clearly wanted both explanations, and it took many weeks of that class for me to understand the brilliance of his teaching.
Fun Fact: You would know if you ever drove past Professor Jeffrey Lanning. Back in the mid-80s when I was at Wayne State University Law School, Professor Lanning had a large “artificial” pompadour hairstyle and drove around in a huge burgundy Cadillac Eldorado convertible with two bright gold ornate horns on either side of the windshield and a license plate that read “Harv ‘47”. Rest in peace and thank you, professor.
