Real Estate Investing Terms:
Absolute Auction
No matter what the price, the property is sold to the highest bidder.
As-Is
The property is being offered in its current state and no repairs will be made. However, there can be some exceptions to this if you are purchasing a REO property from a bank, since some banks will make repairs in some instances.
Bargain and Sale Deed
A bargain and sale deed is similar to a quitclaim deed in that it conveys the grantor’s interest at the time of transfer. But it can also include convenants that make it more similar to a grant deed by guaranteeing that the grantor has the legal right to transfer the property. This type of deed is often provided in the case of a transfer from a bank or estate representative, instead of someone who had lived in the property. It provides a guarantee that the grantor has the legal right to transfer the property, but does not provide any guarantee that the property is free of debts or liens. While a bargain and sale deed limits the seller’s liability, it does not protect the buyer from title claims, so title insurance should be purchased to protect the buyer.
Buyer’s Premium
A fee at auctions that is charged by the seller to cover the administrative expenses of conducting the auction. It is essentially just like a real estate commission for a property sale, but it’s typically in the form of a percentage of the winning bid. This fee must be taken into account when estimating costs for any purchase at an auction.
Certificate of Discharge
A release of a federal tax lien from a specific property that is being sold. This provides clear title for the property being sold. Note that a certificate of discharge does not release the lien against the taxpayer unless the debt can be fully paid off by the sale of the property.
Certificate of Title
This is a document issued by a state or municipality that identifies an owner of a piece of real property. A certificate of title can apply to real property, boats, cars, business entities, and other items. It provides evidence of ownership, and when issued through a title insurance company, it is technically a statement of opinion of the status of the title, but certificates of title are not guarantees of clear title, which is why title insurance is recommended. NOTE: When you win an auction you do not own the property until you receive the certificate of title.
Chattel
A catch-all classification for any item of tangible personal property that can be moved, such as furniture, cars, and even livestock. In real estate investing, this term is most often heard in regard to mobile homes and houseboats, which are classified as personal property and not real property. This classification also affects property taxes, financial assessments, and ownership rights, as well as how mortgages are issued. While real property can increase in value over time and through improvements, the value of personal property, with some exceptions, typically depreciates quickly and does not increase if improvements are made. Chattel typically comes with weaker and harder to enforce property rights compared to real property.
Code Enforcement or Administrative Lien
A property that is deteriorating or has a safety hazard may have a lien placed upon it for code violations until the property is brought to a condition that remedies the violations. Code violations can include such things as uncut grass, broken windows or open doors, cracked concrete steps, noxious fumes emanating from the property, or other issue that threaten the structure, such as missing gutters or siding. Even if someone else has dumped debris on your property, which happens often with vacant properties, you as the property owner are responsible. Often these violations are reported by neighbors who feel the property is a nuisance or hazard to the neighborhood.
Complaints are investigated by a code inspector who will give the property owner a period of time to correct the violation unless it is irreparable. If the violation is not corrected in the allotted timeframe or if it is a repeat violation, a hearing is held and the code-enforcement board issues findings of fact, an order, and a fine. This fine is recorded in public records by the local government, and becomes a lien against the property, as well as an other real or personal property owned by the violator. If a property owner wishes to sell another property, this lien may affect that property as well, unless this second property is their primary home. If this lien is not repaid within a period of typically three months after recording, the local government may foreclose on the lien or sue for the amount of the lien plus interest. This type of lien can survive the issuance of a tax deed at a tax sale and the foreclosure process, so buyers must be arware of these liens when purchasing properties at auctions.
Conforming Loan
A typical mortgage loan that conforms with the guidelines set by Fannie Mae and Freddie Mac (or FH….??????) These are typically loans for up to thirty years that require particular credit worthiness, must be below a certain limit that’s set based on the cost of living in that market, and traditionally require a downpayment of 20%, although this can vary between 10-25%.
Conventional Non-Government Loan
These can be confirming and non-conforming, but are most often a typical mortgage loan up to thirty years that requires a downpayment of 10-25% (traditionally 20%). These loans are packaged by lenders and sold to investors on the secondary market, often to Fannie Mae or Freddie Mac.
Deed (Traditional Deed)
The term deed used alone typically refers to a traditional deed, which transfers a property from seller to owner without providing any assurances regarding the title, but there are many specific types of deeds, including deed of trusts, warranty deeds, grant deeds, sale deeds, quitclaim deeds, and mortgage deeds.
Deed of Trust
A deed of trust is a legal document that creates a lien, or security interest, against a property on behalf of a lender, and provides the borrower with equitable title to the property. (Until the borrower pays off their loan, they will have equitable title, meaning they have the right to use and enjoy the property, but they do not have legal title, or true ownership.) While a mortgage is another legal document that accomplishes this, a deed of trust can be used in some states instead. Deed of trusts involve three parties instead of two, including the lender (beneficiary), the borrower (trustor), and a trustee, such as a title or escrow company, who holds the property’s legal title but is not representative of either the lender or the borrower.
The trustee has the legal right to sell the. Property if the borrower defaults on the loan. Having a deed of trust instead of a mortgage document also affects the way that foreclosures are handled. In states where deed of trusts are used, lenders can foreclose using specific procedural steps without having to go to court (non-judicial foreclosure). Both mortgages and deed of trusts place liens on the property used to secure the loan, but mortgages typically take longer and cost more to foreclose on a lender in default. For this reason, lenders may opt to use deeds of trust in states that allow this practice.
Equitable Title
Until a borrower pays off their loan, they will have equitable title, meaning they have the right to use and enjoy the property, but they do not have legal title, or true and absolute ownership. When a borrower completes the final installment payment of the loan, they have the right to demand that legal title be transferred to them. Other instances of equitable title may involve an easement on the land, such as if a property owner needs access to a driveway on someone else’s property to access their property, or a lease on the premises that already exists when the property ownership changes hands, or certain types of licenses.
When a different party has equitable title to a property but not legal title, the party with legal title does not have the right to use and enjoy the property. For example, when a person takes out a mortgage, the bank that issued that mortgage cannot use and enjoy their property but the borrower who has equitable title can. There are many other scenarios where the legal and equitable title may be held by different entities, such as with air rights, farming rights, water rights, utility line easements, and more.
Fannie Mae and Freddie Mac
These are government-sponsored entities (GSEs) whose purpose is to provide a secondary market for home loans that allows lenders to keep originating and funding new loans. These entities will only purchase loans that conform to their guidelines. These entities are required by law to purchase loans that conform to their requirements.
FHA Loan (Federal Housing Administration Loan)
A Federal Housing Administration loan offers first time and repeat homebuyers an advantage with lower than 20% downpayment requirements, more lenient credit qualifications, and better rates than traditional loans for people who may have blemishes on their credit scores. FHA loans are only available for homes that serve as a primary residence for the borrower, and they require the property to be in an acceptable condition. If it’s not, there are sometimes options to still qualify for an FHA loan, such as the lender getting a license contractor to quote the amount of necessary repairs, then asking the buyer to put the repair money in an escrow account for the lender to pay the contractor after the property sale is completed. If the home needs more extensive repairs, an FHA 203(k) loan may be available instead, and includes in the loan amount a significant budget for repairs. All FHA loans require mortgage insurance as well as additional fees.
FHFA
The Federal Housing Finance Agency, a government entity that sets the limits on conventional loans.
Foreclosure
Foreclosure is a legal process undertaken by a lender to take possession of a mortgaged property in order to sell it to recoup the amount owed by the borrower who has defaulted on a loan.
Foreclosure Auction
Lenders sell properties they have repossessed for non-payment of loans without the involvement of a court. These auctions can be public or private. While foreclosure sales directly from a bank or other database may allow for inspections, when foreclosure are offered at auctions they typically do not, although in some cases they may offer an open house or virtual tour.
General Lien
A lien against property of all types, real and personal, that belongs to a debtor. One example of a general lien is an IRS tax lien.
Hard Money Loan
This is a short term loan that is considered a non-conforming loan because it doesn’t have standard loan terms and is not provided by traditional lenders. Hard money loans are offered by private individuals or private companies that will accept a property as collateral, and they usually require less strict qualifications. These loans typically come with higher rates or shorter repayment terms, such as one to three years. But even with these less desirable terms, hard money loans can be useful, when used with caution, to those who do not qualify for a typical loan and for real estate investors. These loans are usually based more on the value of the property rather than the creditworthiness or verified income of the borrower, and they are often used by investors who need a quicker turn around time than a traditional loan takes to make a real estate purchase. They may also be used when a property requires extensive renovations and would not qualify as collateral for a traditional property loan. In this case, an investor would likely plan to either sell the property after a short period of time renovating it, or refinance the property with a traditional loan once the property has been fixed up and qualifies. When a hard money loan is used as a temporary loan until traditional financing is obtained, it’s called a short-term bridge loan.
HUD (U.S. Department of Housing and Urban Development)
The U.S. Department of Housing and Urban Development was created in 1965 as part of President Lyndon B. Johnson’s War on Poverty. The mission of HUD is to provide resources and policies to address American’s housing needs, enforce fair housing laws, and improve communities across the nation. In addition to providing grants and rental assistance, HUD also provides fair housing education and enforcement and underwrites mortgage insurance programs to help foster home ownership for lower and moderate income families. Additional information about HUD resources can be found at HUD.gov.
Hypothecation
Hypothecation is a collateralized loan, such as a business loan or car loan, that is most often collateralized with movable property. However, it could also be used with real estate, but differs from a standard mortgage loan because although it’s secured by an asset, (such as a property), the title is not transferred to the lender. So when an asset is provided as collateral for a loan, but the borrower does not transfer title to the lender, this is hypothecation. A borrower may retain possession and ownership rights such as rental income just like with other types of property loans, and if the borrower defaults on the loan, the property can be seized or repossessed (hypothecated), which would result in the same effect as a foreclosure for an unpaid mortgage loan. The term hypothecation is also used in other investing contexts, such as investing on margin or short selling when trading securities.
Real estate investors may be able to use hypothecation instead of standard mortgages to obtain more favorable loan terms by adding additional or different forms of collateral. For example, a loan against a cash account at a borrower’s bank may provide a commercial real estate investor a lower interest rate to purchase a property than a loan against the property itself would.
Rehypothecation refers to the use of a borrower’s collateral by a bank or financial institution for its own collateral to access capital from another bank or institution. While this may provide consumers with lower rates to borrow their funds, many consumers are not aware of hypothecation clauses in their loan documents when they use assets as collateral, and rehypothecation may be misused by banks for more speculative actions.
Intangible Property
In contrast to tangible property such as clothing or jewelry, intangible property cannot be touched, felt, or moved, but it can be separated from a holder and sold or transferred, and does not give the owner any right to receive a fixed number of units of currency. These are non-monetary and non-physical in their nature. Some examples of intangible property include intellectual property, customer lists, brand equity, patents and most instances of cryptocurrency as suggested by the International Financial Reporting Standard (IFRS).
Judgement Lien
Judgement liens result from lawsuits when a court awards damages as a money judgement. In this case, the plaintiff becomes a “judgement creditor.” When a judgement liens is not paid off, the judgement creditor is entitled to place a lien on the property of the debtor. Mechanics liens can be converted to judgement liens if the unpaid contractor wins a judgement in court.
Judicial Foreclosure
This method of foreclosure requires legal action on the part of the lender after a mortgage lien is placed on a property. The lender must file a lawsuit and obtain a judgement in court for the foreclosure to proceed.
Jumbo Loans
Loans that exceed the conforming limit for mortgage loans. This amount varies by area and therefore is higher in high-cost markets.
Lender Confirmation Auction
A sale to the highest bidder on a foreclosed property is completed only after the lender has accepted the offer. In this type of auction the lender sets a minimum bid. The homeowner does not play a role in approving this amount because the foreclosure process has already started and the property is usually already vacant.
Levy
A levy is the seizure of a property to satisfy a debt, in contrast to a lien, which is a legal claim against a property to secure a debt.
Lien
A lien in reference to real property is a deed recorded against the title of that property that gives another party an interest in that property. Some liens, like mortgage Liens create a “cloud” on the title of the property, or in other words, properties with liens do not have clear title in a title search. Liens are public record, and can be filed against a property when certain debts are due to banks, contractors, the IRS, courts, Homeowners Associations, or other creditors.
Liens typically stay with the property and do not follow the property owner if they sell or lose the property. Any time a property owner finances their property, they are agreeing to place a voluntary lien on that property. In contrast, an involuntary lien is one that the property owner did not consent to, such as a judgement lien or mechanics lien.
Mechanics Lien
Mechanics liens are involuntary liens placed on real property by an unpaid contractor, supplier, equipment lessor, or other professional who has provided construction, renovation, or repairs at that property. These liens require adherence to specific requirements for notices and have specific deadlines that vary by state. If these specific requirements are not followed the lien cannot be enforced.
Minimum Bid Auction
The seller only accepts a bid that is higher than a set minimum price.
Mortgage-Backed Securities
With mortgage-backed securities, shares in pools of similar mortgages packaged together by lenders and sold to investors at a discount so they profit from interest on the loan over time. For example, if a $200,000 loan might yield $250,000 to a lender over the length of the loan, they may package it with other similar loans and sell it for $225,000, for example.
Mortgage Lien
A voluntary type of lien that is placed on property by a lender when a buyer takes out a loan to purchase a property or refinances a property.
Municipal Lien
A lien filed by a municipal entity against a property owner with unpaid violations, such as fines for housing code violations.
NFTL (Notice of Federal Tax Lien)
A public notice filed with state and local jurisdictions to publicize a lien securing tax debt and assert the right of the government to have priority against creditors. While most liens are prioritized in order of filing, these NFTLs are considered “super liens” because they may take priority over other liens that were filed previously.
No Inclusions
You may see this term on a bank contract saying that there are no inclusions with the home. This refers to items such as refrigerators or other appliances. This may be the official policy, but it’s unlikely the bank will remove any of these items that are in the house before closing.
Non-Conforming Loan
This type of mortgage loan does not meet Fannie Mae and Freddie Mac’s standards for purchase. It may not meet their standards because it’s a larger loan than their loan limit (called a “jumbo loan”). It may also not meet their standards because it allows lower credit scores or a smaller downpayment such as 5%. Non-conforming loans also do not have any government restrictions on the type of property, so you can use these loans for investment properties and vacation homes. Sometimes these loans are written for less than thirty years, and they may come with higher interest. The terms of these loans vary greatly, so be sure to shop around when seeking a non-conforming loan. Many people think of non-conforming loans as loans for people with poor credit, but they are also for larger loans, different types of properties, or different terms from a standard mortgage that meets Fannie Mae and Freddie Mac’s guidelines.
Non-Judicial Foreclosure
This method of foreclosure is used in states that use deed of trusts instead of mortgages, and allows a lender to foreclose using a specific procedure without needing a judgement from a court. This is allowed because a deed of trust is an agreement that allows a third party trustee the right to sell a property if the loan payments are not made.
Non-Performing Note
When a borrower has not made a payment on their property loan in 90 days, and therefore the borrower is in default.
Note
A note specifies the terms of a loan including the amount of the loan, the interest rate, and the schedule of payments.
Partition Action
The liquidation of a jointly held mortgaged property when one of the co-owners wants to force a sale of a property so that they can obtain their share of the value. For example, if two children inherit a property and no other way of partitioning the property was agreed upon or found, such as one child buys out the other’s share of the property, then the property could be forced into a sale even if not all owners want to sell it.
Personal Property
All property that is not classified as real property, including collectibles, cars, jewelry for example. Mobile homes are also classified as personal property and not real property.
PMI
PMI stands for private mortgage insurance (or lenders mortgage insurance in some countries). This is a type of insurance policy that protects the lender from losses if a borrower defaults on their loan. It is typically required for borrowers who are making a downpayment of less than 20%. However, it is not always required with less than 20% on jumbo loans.
Pre-Foreclosure
Pre-foreclosure is a formal notification by a lender to a borrower that they may soon face foreclosure on a property loan if they have not kept up with their loan payments. This notice typically is given by a lender after three months of missed loan payments. Pre-foreclosure provides the borrower one last opportunity to negotiate with the lender and bring their payments up to date. A lien is placed on the property, and the lender can file a legal complaint with the local county government. You will often see pre-foreclosures listed on websites advertising properties for sale, such as Zillow or bank inventory websites. These are properties whose owners are behind on payments for their mortgage, but many of these properties will not be available for sale because they will never reach the foreclosure stage due to borrowers catching up on payments or modifying their loan terms, or a sale of the home before a foreclosure occurs.
Property Lien Funds
These funds offer investors the option of passively investing in tax liens without the same type of risks that come with purchasing tax liens directly at auctions.
Quiet Title
An action of quiet title help to clarify who owns a property. It is a lawsuit filed to settle a title claim. This may be necessary in many instances such as after the death of a title owner when probate was not initiated, for a property that was empty for a prolonged period of time, when there’s a mortgage lender dispute, if there’s evidence of deed fraud in the property’s conveyance history, for boundary disputes, or if a tax debt that has supposedly been paid off cannot be found in any records. A quiet title action can take approximately two to six months to complete, and may be required by a title company in order to obtain title insurance and a mortgage company in order to obtain a mortgage in cases where there is not clear title on a property.
Quitclaim Deed
A quitclaim deed is a legal way to quickly transfer a property from one owner to another without the property needing to be sold, and it offers no title warranties. Quitclaim deeds can be used to remove title defects without expensive litigation so that a general or special warranty deed can be issued, or in family situations such as for the transfer a property from a parent to a child, or an individual to a family trust, or from one spouse to both spouses after marriage. If a quitclaim deed is filed to remove one spouse’s name from the deed to a house, that spouse is removed only from the property ownership, but is not removed from any mortgage obligations if their name was also on the mortgage paperwork. Note that unlike a “bargain and sale” deed, quitclaim deeds do not make any guarantees that the grantor has ownership of the property before the transfer. Instead, it simply transfers any interest the seller might have in the property without making any guarantees as to what that interest might be.
Real Property
Real estate including land at, above, and below the earth’s surface, including everything permanently attached to it, both natural and artificial. Real property include residential, commercial, industrial, special purpose, and agricultural types of properties, and the right to possess, sell, lease, and enjoy them. Real property differs from land in that it includes not only those items attached by nature but also all artificial “improvements” to the land such as houses and fences.
REO (Real Estate Owned)
REOs are properties that banks have already taken ownership of after a foreclosure. Typically the bank uses a management company to maintain the property minimally until it can be sold. The former homeowners may not have been able or willing to maintain them before the foreclosure, and since process of foreclosure and subsequent sale of the property can take a long time, these properties are often in disrepair. Because of this, banks list these properties “as is” and typically will not make any repairs before a sale. These types of properties are a favorite of flippers who purchase them at a low price to renovate them and sell them for a profit.
Reserve Auction
The seller receives the highest bidder as an offer and can accept or reject it.
Securitization
The combination of loans packaged together by lenders then broken into shares to be sold to investors.
Sheriff’s Sale
A public auction where foreclosed properties local to the county are auctioned off. Depending on the laws of the state where a foreclosure occurs, the sale of a property foreclosure may be overseen by the county sheriff at a Sheriff’s Sale instead of by the lender or lender’s trustee. Sheriff Sales can also be held for properties that have judgement liens against them for outstanding debts including tax liens for unpaid property taxes.
Short Sale
When a pre-foreclosure property is sold before foreclosure happens this is often called a short sale. Although this type of sale can occur between private parties, the lender typically has to approve the sale before it can go through. The reason this type of sale is called a “short sale” is that the buyer may be purchasing the property for less than the outstanding loan balance. Short sales do not happen at auctions.
Not all short sales are pre-foreclosures however, because they are often sold before they reach that stage. Investors can often purchase properties for less than fair market value (FMV) in these scenarios and turn them around quickly for a profit. The reason a property owner may wish to sell their home or other property for less than the balance on their loan to avoid having a foreclosure on their credit history. (Although it’s important to note that even one missed mortgage payment has a significantly negative impact on a person’s credit score.) For homeowners, this means they could still buy a more affordable home after the sale. Therefore short sales are often a good deal for all involved, including the lending institution because they avoid foreclosure costs, carrying costs, and closing costs. However, the purchase price will likely be more than it would be if the home had already been foreclosed.
Special Warranty Deed (Also Referred to as a Covenant Deed, Grant Deed, Limited Warranty Deed, or Statutory Warranty Deed)
A special warranty deed only makes guarantees about the title regarding the time the seller (or grantor) owned the property. The seller only warrants that the property has not been sold to another party, and that there are not taxes owed or other current liens that the seller has not disclosed. This means that any title claims that may be dated before the seller took possession are not covered, which this leaves a buyer open to potential problems. This type of deed is often used to transfer ownership at tax sales or foreclosure sales.
Specific Lien
A lien against a specific piece of property, such as a mortgage lien on a house.
Sub-Performing Note
When a borrower is 30 days overdue on their property loan payments.
Tax Deed
A tax deed grants ownership rights to a governmental body to sell a property for unpaid property taxes. Tax deeds are sold at auctions to the highest bidder for the cost of the debt plus interest.
Tax Lien
This is a legal claim against property to secure an interest for the government because of a tax debt. A tax lien can be placed against personal property or real property. Federal tax liens result from nonpayment of federal taxes by any “person” as defined by law. A “person” in this context can be an individual, a trust, a legal partnership, an association, an estate, a corporation, or other types of companies. Note that state law varies in terms of taxpayer rights in a property, and the federal government will determine taxpayer rights in accordance with the laws of the state where the property is located. This may come into play in cases of civil union, domestic partnerships, and other cases. Things can get complicated when a property is owned by multiple parties but only one party is named on the tax lien, as in the case of the spouse of a taxpayer.
Tax Lien Certificate
A tax lien certificate is a property tax lien against a property (not against the owner), and can be purchased at tax sales to yield interest to the buyer. The purchase of a tax lien certificate at does not transfer ownership of the property or affect the title of the property. A tax lien certificate is typically superior to all other liens upon the property except possibly liens from the federal government such as the IRS.
In the case of a default on this lien debt resulting in foreclosure, the buyer of the tax certificate may eventually, after a specific legal process, become the owner of the property.
Tax Lien
A tax lien is an involuntary type of lien that is placed on a property by a government agency or the IRS for unpaid property taxes, personal or business taxes, or in some cases for other unpaid debts such as fines for violations from a local building code enforcement department.
Federal tax liens result from nonpayment of federal taxes by any “person” as defined by law. A “person” in this context can be an individual, a trust, a legal partnership, an association, an estate, a corporation, or other types of companies.
Note that state law varies in terms of taxpayer rights in a property, and the federal government will determine taxpayer rights in accordance with the laws of the state where the property is located. This may come into play in cases of civil union, domestic partnerships, and other cases. Things can get complicated when a property is owned by multiple parties but only one party is named on the tax lien, as in the case of the spouse of a taxpayer.
Tax Lien Sale
If the property is being auctioned for back taxes, it’s sold at a tax lien sale to the highest bidder. This money goes to the tax collector to pay off the unpaid taxes, and the lien transfers to the property investor who placed the winning bid. At this point, the investor owns the liens and has the legal right to collect the amount of the lines plus interest from the homeowner. If the homeowner pays off these liens in the allotted time, then the homeowner keeps the property. If the homeowner fails to pay off this debt, then the investor can foreclose on the property and it becomes theirs. Although this comes with risk, it can provide an investor with either interest payments if the homeowner does pay off the lien or a discounted property.
Transfer on Death Deed (TOD)
This type of deed transfers a property to a named beneficiary after the owner or owners’ death.
UCC (Uniform Commercial Code) Lien
A UCC lien is a type of voluntary lien that can be filed with the Secretary of State by anyone who lends mother to another party. This lien creates a claim on specific real or personal property until the debt is eliminated. This situation can occur when someone is borrowing money for a use other than to purchase a specific asset, or if the borrower has poor credit. Contractors, for example, may have UCC liens filed against their property when they purchase materials from a supplier on credit.
Upset Bid Period
In states that allow upset bidding at property foreclosure auctions, bidding is extended beyond the auction date. Often this extended period of time is 10 days after the auction ends. Upset bids must be a specific amount or percent higher than the last bid (rules vary by state), so therefore someone cannot win with an upset bid that’s one dollar more than the winning bid at the auction.
Upset Price
The minimum dollar amount that the lender (or other plaintiff) will accept for a property. It could be a higher or lower amount than the judgement against the property, and the property will not be sold at an auction if this amount is not met.
VA Loan
A VA Loan is a type of mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA). It is only offered to Service Members, Veterans, and eligible surviving military spouses. This type of loan requires no downpayment or private mortgage insurance (PMI), limits closing costs, offers competitive interest rates, and can be used for purchases, repairs, and changes to the home. (Some lenders may still require a downpayment even though it’s not required for a VA loan.) A VA loan can be used to purchase, refinance, or improve a home, and is a lifetime benefit that can be used over and over.
Warranty Deed
The two types of warranty deeds include “special” and “general.” A special warranty deed guarantees there are no encumbrances on the property title during the period it was owned by the current seller. A general warranty type of deed is the most comprehensive because it “warrants” a free and clear title to a property and indicates that the owner has the legal right to transfer ownership. A title search is still needed to prove ownership of the property.