Deed Types

Ohio Statutory Deed Forms

The usual form of Real Estate Purchase Contract provides that, at Closing, the Seller will convey title by furnishing to the Buyer(s), a “Deed of General Warranty.”  The REALTOR, and of course the Buyer and Seller, should be aware of what such a deed conveys, whether the Seller is capable or willing to provide such a deed, and what alternative types of deeds are available to close the transaction.

All duly executed deeds accomplish the transfer of the grantor’s interest, but each type varies greatly in the extent to which the grantor protects the grantee by guaranteeing good title through covenants and warranties. On one end of the spectrum is the general warranty deed – offering near total protection. On the other is the quitclaim deed – offering almost no protection.  The menu of covenants and warranties has been developed over the centuries through use of common law formulas which, when incorporated into deeds with the correct language and in the correct combinations, will produce the various common law deed types, or “long form” deeds.

The most common deed types are the General Warranty Deed, Limited Warranty Deed,  Fiduciary Deed, and Quitclaim Deed.

Once the correct type of deed is selected, and the selection is made part of the contract, how is the Buyer to recognize the instrument given to him at closing as the type of deed specified in the contract?   Fortunately, the Ohio legislature has simplified this area of the law in codifying types of common law deeds and by providing “statutory short forms” as a format for lawyers to use in drafting them.  In addition, Revised Code Chapter 5302 provides the “short form” language to designate the type of interest granted to co-tenants, where the survivorship feature is desired.

Beginning in August 2000, a mechanism was established to designate a statutory “Transfer on Death” provision. It should be noted that this mechanism has been modified, with the latest provisions effective in December 2009.  Fortunately, Revised Code §5302.24 validates “transfer on Death” designations that were valid under the law effective as of the date they were executed and recorded.

Before reviewing the deed types and the recent amendments, it is important to recognize that title is defined as ownership, while the deed is the instrument that transfers ownership.  Also, one needs to distinguish between “good” title referring to ownership and “marketable” title referring to that which a willing buyer will purchase in an arm’s-length transaction without compulsion. The Statute of Frauds requires every deed to be in writing, but deeds, unlike negotiable instruments, are non-assignable, so each and every conveyance (except those that arise by operation of law) requires a new deed signed by the appropriate grantor.  The most common interests that arise by operation of law are those acquired by survivorship, statutory dower and adverse possession.

Ohio Revised Code Chapter 5302 prescribes statutory forms for the following deed types.  Although, the common law “long forms” are still sufficient, the statutes provide that the use of these “short form” deeds will produce the transfer of title, in accordance with the definitions provided in the Chapter.

General Warranty Deed (R.C. §5302.05). The general warranty deed is the standard sought by purchasers in arm’s-length transactions because it not only conveys all of the grantor’s right, title and interest, legal and equitable, in and to the described real property – but also it guarantees the title from all previous transferors in the chain of title.  Specifically, the grantor covenants that: (1) he has title and owns the property; (2) he has power and authority to convey; (3) the property is not encumbered (e.g. mortgages, liens, easements); (4) the grantee’s possession and quiet enjoyment will not be disturbed by a claim of superior title; and (5) the grantor will defend the grantee against all claims regarding the title that exist as of the date of the conveyance.   In determining the protection offered, the grantee must be aware of any limitations (e.g. exceptions or reservations) to the title, as recited in the deed language, because regardless of deed type, expressed title limitations lessen the scope of that which is warranted.   As a word of caution, the acceptance of a General Warranty Deed is not a substitute for title insurance, and the grantee needs to understand that, as with any other contractual representations or warranties, there are practical limitations to enforcement of the deed representations and warranties, such as the grantor’s subsequent bankruptcy or disappearance.

Limited Warranty Deed (R.C. 5302.07).  Under the limited or special warranty deed, the grantor warrants only that the grantor has done nothing to create a defect in or a dilution of the title.  Thus, unlike the general warranty deed, the protection offered does not extend backward through the chain of title.

Fiduciary Deed (5302.09). The fiduciary deed is used to transfer real estate from a grantor who is a fiduciary – one who is put in a position of trust – to include executor, administrator, trustee, guardian, receiver or commissioner. Generally, the fiduciary warrants only that he or she is duly appointed and acting within his or her authority. In other ways, the fiduciary deed is similar to the quitclaim deed.

Quitclaim Deed (R.C. 5302.11).  The quitclaim deed is often used in other than arm’s-length transactions where the parties are concerned more with the transfer itself than the protections offered to guarantee the extent of that title. Under the quitclaim deed, the grantor transfers whatever title the grantor actually possesses (whether that interest is total, partial or nonexistent) – the grantor gives no warranties or guaranties as to that title.  Some common situations calling for a quitclaim deed are domestic relations (divorce, dissolution), probate (estate matters) and gifts.  Given that a quitclaim deed offers no protection, case law has pronounced that a purchaser is deemed to be on notice of potential title defects by accepting it. See, Finmore v Epstein(1984), 18 Ohio App.3d 88. Before using a quitclaim deed as a means of conveyance, both the grantor and grantee should obtain legal advice as to the consequences involved, including the effect such conveyance may have on prior owners’ title insurance coverage.

Survivorship Deed (R.C. 5302.17).  This section provides the statutory language for the automatic transfer of title to the surviving grantee, often a spouse or a sibling, upon the death of the other grantee.  This type of deed defines the interest obtained by grantees who become co-owners, who each immediately become owners of an undivided fractional interest during their lifetimes.  On the death of each co-owner, his or her fractional interest passes by operation of law to the surviving co-owner(s), until the last to survive becomes the sole owner in fee simple.  As set forth in Revised Code §§5302.19 and 5302.20, a conveyance to one or more grantees, separated simply by the words “and” or “or” will create a tenancy in common, which means that the share of each co-owner will pass upon his or her death through the probate process.  Use of the statutory survivorship deed form, or use of alternative wording that “shows a clear intent to create a survivorship tenancy” is necessary to invoke the survivorship feature.

Transfer on Death Designation (R.C. 5302.22).   This transfer on death mechanism was added to the statutory framework in August 2000, originally through use of a “Transfer on Death Deed.” Under the current law, as amended effective in December 2009, the “Transfer on Death” designation is accomplished by the execution and recording of an Affidavit. The statutes provide this mechanism to name a beneficiary or beneficiaries to “inherit” the property upon the death of the current owner(s).  To achieve the same result, the owner would have either formed a trust to hold title to the property, designated the beneficiary for transfer at death outside of probate, or provided for devise by will, through the probate process.  This relatively new Transfer on Death designation allows the owner to avoid the expenses of both formation of a trust, and probate. Use of the Transfer on Death Affidavit differs significantly from the Survivorship Deed, in that the named beneficiary acquires no immediate interest in the property, and the beneficiary’s status may be revoked by the owner at any time during the owner’s lifetime without the consent (or knowledge) of the beneficiary.  The beneficiary may be removed or replaced at any time during the owner’s lifetime, upon execution and recording of a new affidavit by the owner.

The statutory deed forms are updated from time to time by the legislature, and the current versions should always be checked.  Effective February 1, 2002, the requirement for witnesses to the grantor’s execution of deeds has been eliminated, and the forms contained in Revised Code Chapter 5302 have been revised, accordingly.

Although the short form language of the various deed types may be found in and copied from the Revised Code, the parties to the real estate transaction are well advised to consult with a lawyer as to not only the selection of the deed type which best fits the circumstances of the parties, but also as to whether the statutory form fulfills any special circumstances without modification.

 

Date:  February 12, 2002, revised April 15, 2013

John E. Stillpass

John E. Stillpass, Attorneys at Law

www.stillpass.com

Joint Committee Cincinnati Bar Association/Cincinnati Area Board of Realtors