A Bargain and Sale Deed is a legal contract used to transfer ownership of real property. Unlike a warranty deed, a bargain and sale deed does not provide any covenants or guarantees from the seller regarding the validity of the title. This type of deed is most often used in transactions where the seller does not want or is unable to guarantee the title, such as foreclosures, tax sales, or property transfers between family members.
Characteristics of a Bargain and Sale Deed
The essential characteristics of a bargain and sale deed include:
- Conveys Interest: It transfers whatever interest the grantor (seller) has in the property to the grantee (buyer).
- No Warranties: The seller makes no guarantees about the title’s status or any hidden liabilities.
- Legal Effect: The deed conveys the title, but it may not protect the grantee against potential title defects or encumbrances.
Types of Bargain and Sale Deeds
1. General Bargain and Sale Deed:
Conveys whatever interest the grantor holds in the property but provides no covenants of title.
2. Bargain and Sale Deed with Covenants:
Includes limited covenants, such as the grantor ensuring they haven’t done anything to encumber the title during their ownership, offering a level of protection to the grantee.
Special Considerations
When using a bargain and sale deed, it’s crucial to:
- Perform a Title Search: Ensure a thorough title search is conducted to uncover any potential issues or encumbrances.
- Consult Legal Advice: Legal professionals can help interpret the deed and assess any risks involved.
- Title Insurance: Consider purchasing title insurance to protect against unknown title defects.
Examples of Usage
Common scenarios where a bargain and sale deed may be used include:
- Foreclosure Sales: Properties sold at foreclosure auctions often use bargain and sale deeds due to the uncertainty about the title status.
- Tax Sales: Government entities typically use these deeds when selling properties acquired through tax liens.
- Family Transfers: Family members transferring property may use a bargain and sale deed, especially when no money changes hands and title guarantees are unnecessary.
Historical Context
The concept of a bargain and sale deed originated from English Common Law. Historically, it allowed for the transfer of property without necessitating the formalities required by other types of deeds. This flexibility made it useful in various property transactions, particularly those involving properties with uncertain histories.
Applicability in Modern Transactions
Today, bargain and sale deeds are less common than other types of deeds like warranty or quitclaim deeds, but they remain relevant in specific circumstances:
- Real Estate Investors: Often use these deeds when purchasing distressed properties where the certainty of title is less critical.
- Government Sales: Frequently utilized in the sale of surplus or tax foreclosed properties.
Comparisons with Related Deeds
Quitclaim Deed
A Quitclaim Deed transfers whatever interest the grantor has in the property without any warranties. It is similar to a bargain and sale deed but provides even less security as it does not imply the grantor possesses any title at all.
Warranty Deed
A Warranty Deed offers the highest level of protection to the grantee. The grantor guarantees the title is clear of any defects or encumbrances and will defend the title against any claims.
Related Terms
- Title Search: The process of examining public records to determine the legal ownership of a property.
- Encumbrance: A claim or liability on a property, such as a mortgage, lien, or easement.
- Grantor: The person transferring interest in property.
- Grantee: The person receiving interest in property.
FAQs
Is a Bargain and Sale Deed risky for buyers?
Why would someone use a Bargain and Sale Deed over a Warranty Deed?
Can you convert a Bargain and Sale Deed to a Warranty Deed?
References
- Black’s Law Dictionary
- Real Estate Law, Fifth Edition, by Marianne M. Jennings
- The Essentials of Real Estate Law, Fourth Edition, by Lynn T. Slossberg
Summary
A Bargain and Sale Deed is a valuable tool in specific real estate transactions where title guarantees are unnecessary or impractical. It conveys whatever interest the grantor has in the property to the grantee, without assurances about the title’s validity. While it carries inherent risks for the buyer, appropriate due diligence, like a title search and obtaining title insurance, can provide some protection. Understanding the nature and uses of bargain and sale deeds can aid in making informed decisions in real estate dealings.
