Common Types of Deed in New York

Understanding the different types of deeds used in New York real estate transactions is crucial for both buyers and sellers. The type of deed affects the level of protection you receive and the warranties the seller makes about the property's title. Let's explore the primary deed types and their implications.

Full Warranty Deed

The most protective option for purchasers, a full warranty deed (also called a general warranty deed) provides comprehensive guarantees. The seller affirms they possess clear title and will defend against third-party claims.

Key Assurances Include:

Covenant of Seisin: "The seller warrants that they own the property and have the legal right to transfer it." This guarantees the seller actually owns what they're selling.

Covenant Against Encumbrances: Property is free from liens, mortgages, easements, or other encumbrances except those specifically disclosed in the deed.

Covenant of Quiet Enjoyment: Buyer's possession won't face third-party interference. No one will come forward claiming superior rights to the property.

Covenant of Warranty: The seller will defend the title against all claims and compensate the buyer for any losses if the title fails.

Covenant of Further Assurances: The seller will execute any additional documents necessary to perfect the buyer's title.

When It's Used:

• Rare in New York residential transactions
• More common in other states
• Sometimes used in high-value commercial transactions
• When buyer has significant negotiating power

Advantages:

• Maximum buyer protection
• Seller warrants title from the beginning of the chain
• Seller liable for any title defects, even from previous owners

Disadvantages:

• Sellers reluctant to provide due to extensive liability
• May increase seller's title insurance costs
• Not customary in New York, so requesting it may complicate negotiations

Bargain and Sale Deed with Covenant Against Grantor's Acts

This middle-ground option offers moderate buyer protection and is the most common deed type in New York residential real estate transactions.

What It Provides:

The seller makes no broad title claims but warrants they haven't created encumbrances during their ownership. "This type of deed is most commonly used in New York real estate transactions, as it offers a balance between the buyer's protection and the seller's liability."

The Covenant Means:

• Seller hasn't done anything to impair the title
• Seller hasn't created any liens or encumbrances (except those disclosed)
• Seller hasn't conveyed the property to anyone else
• But seller makes NO warranties about title defects created by previous owners

When It's Used:

• Standard residential transactions in New York
• Commercial transactions
• Most arm's length sales between unrelated parties

Advantages:

• Acceptable to most sellers and buyers
• Provides reasonable protection
• Balanced approach to liability
• Standard in New York marketplace

Disadvantages:

• Doesn't protect against title defects from previous owners
• Less protection than full warranty deed
• Buyer should obtain title insurance to fill gaps

Bargain and Sale Deed Without Covenants

Similar to above but without any promises from the seller. Transfers whatever interest the seller has but with no warranties whatsoever.

When It's Used:

• Foreclosure sales
• Tax sales
• Estate sales where executor wants minimal liability
• Sheriff's sales

Buyer Beware:

This provides very little protection. Title insurance is essential.

Quitclaim Deed

Offering minimal buyer protection, quitclaim deeds transfer whatever interest the seller possesses with absolutely no warranties. The buyer assumes all risks.

What It Means:

"I'm giving you whatever rights I have, if any, but I make no promises about what those rights are."

• No warranty of ownership
• No warranty against encumbrances
• No covenant of quiet enjoyment
• No promise of any kind

When It's Used:

"Commonly used when the parties are well acquainted, such as transferring property between family members." Also used for:

• Divorce settlements dividing property
• Adding or removing spouse from title
• Clearing title defects
• Correcting deed errors
• Transferring within family
• Gifting property

Advantages:

• Simple and inexpensive
• Quickly transfers whatever interest exists
• Minimal liability for grantor
• Useful for clearing title clouds

Disadvantages:

• Zero protection for buyer
• Grantor may have no interest to convey
• Can't sue grantor if title is defective
• Difficult to obtain financing (most lenders won't accept)
• Title insurance may be difficult or impossible to obtain

Executor's Deed / Administrator's Deed

Used when property is sold from an estate through probate.

Characteristics:

• Limited warranties (executor only warrants they haven't impaired title)
• Requires court approval
• Subject to estate debts and claims

Referee's Deed

Used in foreclosure or partition sales when property is sold by court-appointed referee.

Characteristics:

• No warranties
• Conveys only what foreclosed owner had
• Subject to senior liens in some cases

Tax Deed

Used when property is sold for unpaid taxes.

Characteristics:

• Minimal warranties
• May require quiet title action
• Complex redemption rights may apply

Choosing the Right Deed

Sellers Should Consider:

• Level of liability they're willing to accept
• Customary practice in their area (New York = B&S with covenant)
• Buyer's expectations and market conditions
• Attorney's advice on appropriate deed type

Buyers Should Consider:

• Level of protection needed
• Relationship with seller
• Whether title insurance will be obtained (it should be!)
• Lender requirements
• Attorney's recommendations

The Role of Title Insurance

Regardless of deed type, buyers should obtain owner's title insurance. This provides protection against:

• Defects not covered by the deed warranties
• Title issues that predate the seller's ownership
• Fraud and forgery
• Errors in public records
• Unknown heirs or liens

Title insurance fills the gaps left by even the strongest deed warranties.

Common Misconceptions

Myth: "A quitclaim deed means there are title problems."

Reality: Not necessarily. It's often used for convenience in family transfers or title corrections.

Myth: "If I get a warranty deed, I don't need title insurance."

Reality: Warranty deeds help, but title insurance is still essential. The seller may not have assets to cover a title defect even if they're liable.

Myth: "All deeds are the same."

Reality: Significant differences exist in the level of protection provided.

Conclusion

The type of deed significantly impacts your rights and protections as a buyer. In New York, the bargain and sale deed with covenant against grantor's acts has become standard for good reason—it balances protection with practicality.

However, understanding your options and the implications of each deed type is essential. Always consult with an experienced real estate attorney to ensure you receive appropriate protection for your specific transaction.

And regardless of deed type, obtain owner's title insurance to protect against title defects.

Contact Pete Weinman for guidance on deed types and title protection for your New York real estate transaction.