What You Need to Know about Property Deeds in New Jersey

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Some say variety is the spice of life. Well, in New Jersey, there is potpourri (no pun intended) of deeds and you better know which one you are receiving at a real estate closing.  So, property deeds are signed written instruments for transferring the title of property from a seller to a buyer. Yes lackluster, but the devil is in the details where names are misspelled, and legal descriptions are wrong.  In New Jersey, the deed must be in English, identify the seller/buyer (grantor/grantee), name the person that prepared the deed, state the consideration (amount paid) for the transfer, contain a legal description of the property (a survey), include the signature of the grantor and be signed before a notary. All New Jersey deeds must be recorded in the county where the property is located. Beyond these basic requirements, there are many different types of deeds that can be used to transfer property in New Jersey, so it’s prudent to consult with an experienced New Jersey real estate attorney to advise you about what type of deed is best for your real estate transaction.

Bargain and Sale Deed

This is the most common type of deed used to transfer real estate.  In New Jersey, a bargain and sale deed must contain a covenant that guarantees (warrants) that the property is not encumbered by any acts of the seller during his or her time of ownership.   Unlike a quit claim deed, which is discussed below, the grantor holds an actual interest in the property being conveyed.

Quit Claim Deed

From the standard to the substandard. This type of deed conveys a seller’s interest in a parcel of real estate, without any promises about the type of interest being conveyed or that any interest exists at all. It offers much less protection than a Bargain and Sale Deed.  A quit claim deed causes more issues than any other type of a deed. Why they even have this deed is beyond me. It causes confusion and chaos in the title chain.  This is why the title company search is so important to a real estate transaction, especially with a quit claim deed.

Special Warranty Deeds and General Warranty Deeds

A general warranty deed warrants a title against claims from any person, and a special warranty deed warrants title only against claims arising through the grantor.

Sheriff’s Deed

Sheriff’s deed is a deed that gives ownership rights in property bought at the county sheriff’s sale. A sheriff upon order of a court conducts the sale after a failure to pay a judgment. Other times, it is a result of a mortgage foreclosure, which by itself is a long and drawn out process. In such cases a sheriff’s deed refers to the deed given in foreclosure of a mortgage. Usually there are no warranties, so it is imperative that a buyer obtains the title report that is run before the property is put into bidding.

Deed in Lieu of Foreclosure

In order to avoid foreclosure, a mortgage debtor voluntarily agrees to transfer all rights to the property to the mortgage lender.

Cooperative Deeds

Cooperative ownership was established in New Jersey under common law, but as this type of ownership became more popular, it became codified. The Cooperative Recording Act clarifies the legal basis for cooperative ownership and requires the use of a “master deed” that is amended when the real estate interests change.

Restrictions Beyond The Deed.

When purchasing a home, always conduct your due diligence. There are often many restrictions on properties not written in your deed. For instance, homeowner owners  associations, condominium association rules, co-op rules, and proprietary leases, can have very strict restrictions that you should be aware of that will not only impact your right to the use of your property, but also impact buying and selling. Prior to purchase, during the attorney review period, or during the due diligence period, ask your realtor to review the bylaws and rules so you know what you are purchasing.

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