A deed of guarantee is a legal document in which the seller guarantees that the property purchased is free from mortgages, liens or other encumbrances. A title search is completed to establish ownership and any outstanding mortgages, liens or judgments. Home buyers usually purchase title insurance to ensure clear title.
Also known as a deed of deed, a deed of guarantee is a legal document in which the seller, or grantor, guarantees to the buyer or lessee that the property purchased is free from mortgages, liens or other encumbrances. If it is a general guarantee deed, the guarantee extends to the origin of the good. Conversely, if it is a specific deed of security, the seller warrants that there are no mortgages, liens or other encumbrances while he or she owned the property.
A security deed therefore provides a method of transferring ownership or real title that offers protection to the buyer. This is the case because the seller warrants, or guarantees, that he legally owns the property. An individual buying a property or a bank lending money to the seller to purchase the property typically does not want to find out that the property has tax or mechanical liens or outstanding mortgages after the transaction has been completed. If a seller provides a security deed and then the buyer later discovers an unpaid lien or other financial encumbrance, the buyer can bring a lawsuit against the seller. Because sellers could die, have limited financial resources, or file for bankruptcy, real estate transactions involving deeds are often accompanied by searches and title insurance.
Typically, a title search or title extract is completed by a securities firm where researchers examine public records, usually county real estate records. There are three significant areas that are being examined. First, the exact location and legal ownership is established; second, the property is reviewed for any outstanding mortgages, liens, or judgments that would prevent the buyer from obtaining clear title. Stocks are typically listed after the quest is completed as good, marketable, dubious, or bad. Third, the title search provides details about easements or other property restrictions.
In addition to having a deed of guarantee, home buyers usually purchase title insurance to ensure clear title. If lenders provide mortgage funds, the lenders will require this insurance; the fee is paid only once, generally at the closing of a property, for title insurance. Title insurance is available to owners, buyers and lenders. Landlords are assured that the promise made in the outright collateral deed has been sought, while lenders are assured that there are no judgments, liens or other liens on the property. Some extended title policies also cover other areas, such as building permit violations or covenant restrictions.
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