Published in the Firelands Farmer on Monday, November 11, 2013
By: Mark Coriell
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Many farmers have built their business in part by taking advantage of every opportunity to acquire real estate over multiple generations. All those real estate acquisitions are concluded by a deed being signed, delivered and recorded at the closing. The deed is the document that legally transfers the property from the seller to the buyer. But what’s in a deed?
The answer to that question can mostly be broken down into 4 categories: i. the basics; ii. the type; iii. the reservations and restrictions; and iv. the spouse.
The Basics. A deed is always going to contain at least three things: the names of the buyer and seller; a description of the property; and the seller’s notarized signature. Those 3 things are all essential to get the deed recorded by local county officials. Without that, the property can’t be transferred correctly.
The Type. A deed can be one of several types but mostly fall into one of two categories: quit-claim or warranty. A quit-claim deed transfers whatever interest the seller has in the property to the buyer, without making any guarantee about the extent of the seller’s ownership or whether there are any problems with the title to the property. A warranty deed is just the opposite in that the seller is making a guarantee to the buyer that the seller owns the property free from all title problems except those agreed upon in the purchase agreement. Certainly, a warranty deed is what most buyers are looking for at the real estate closing. A quit-claim deed, on the other hand, can be used in family transactions where title work isn’t done or in situations in which the parties are already aware of potential title problems.
The Reservations and Restrictions. Sometimes a deed will either reserve some rights in the property for the seller or create some restriction on the property. For example, particularly when property is gifted, a transferor might want to reserve a life estate to allow him to continue to live at home for his lifetime. Alternatively, as another example, a person might be willing to sell property only if the buyer agrees not to erect any structures on the property for a number of years. Finally, a deed might be subject to easements granted to other landowners in the past. In any event, it’s important for buyers to understand any reservations or restrictions placed on the deed that’s being transferred as well as in deeds or other documents recorded in the past.
The Spouse. Ohio has an unusual rule called “dower” that was originally designed to protect a surviving spouse in the event of a spouse’s untimely death. It’s largely outdated now due to more modern laws benefitting spouses, but those dower rules have a very practical impact on the transfer of real estate: regardless of which spouse may own a property, both spouses must sign the deed in order for real estate (including the dower interest) to be transferred to another person. Dower wouldn’t apply if the property were held in trust or owned by an LLC or some other entity, but, with respect to individuals, it’s very much part of the process.
And that’s what’s in a deed.
Mark Coriell is an attorney at Laycock & Coriell in Norwalk. This article is intended as general information only and may not be construed as legal advice.