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A Guide to Bargain and Sale Deeds - What You Need to Know

What exactly is a bargain and sale deed? And how does it work? Trust & Will explains.

Patrick Hicks

Patrick Hicks, @PatrickHicks

Head of Legal, Trust & Will

A deed is an important legal instrument that is used to transfer ownership of real property. However, there are many different types of deeds out there, and the one you use matters. Different deeds are associated with different levels of protections, as well as different modalities of transferring property interest. Thus, the type of deed you use can impact your legal rights. One special type of deed is a bargain and sale deed. If you are purchasing property and come across this type of deed, you’ll want to know why it is being used, and what your rights are. Keep reading to find out what you need to know about this special type of deed.

What is a bargain and sale deed?

When you come across a bargain and sale deed, it means that the party selling the property is the sole owner of the property and therefore has the right to sell it to you. This is in contrast to other types of deeds when the seller may only have partial title to the property. Bargain and sale deeds offer no guarantees for the buyer. If any title issues come up, such as liens or other claims against the property, then the buyer could be legally and financially responsible.

For these reasons, understanding the bargain and sale deed definition is critical as they could impact your legal rights. 

You may be wondering, “Why would I accept a type of deed where I have minimal protections?”

Bargain and sale deeds are not common when it comes to the traditional buy-and-sell real estate between a homeowner and buyer. They are usually used in relation to foreclosure and tax sales. The entity that seized the property is the seller, and thus they have limited or no knowledge of the history or status of the property.

What is the purpose of a bargain and sale deed?

The purpose of a bargain and sale deed is to transfer property between a property owner and a buyer. In the case of this type of deed, the owner is not taking any responsibility for any issues that could come up with the property title. Thus, the buyer must be willing to take on possible liabilities. 

Bargain and sale deeds are often used when the owner of the property isn’t sure regarding the status or history of the property, which explains why they wouldn’t take on any liability. It is most often used in pursuant to a foreclosure, tax sale, or settlement of a deceased person’s estate.

How does a bargain and sale deed work?

A bargain and sale deed includes a warranty stating that the grantor has title to the property. In other words, they are the proper owner and have the right to sell it. There are no other owners who may have claim to the property. However, the deed does not and cannot guarantee that the property is free of claims. Therefore, it does not include any covenants.

However, there is a version that can state one or more guarantees, known as a bargain and sale deed with covenants. This type of deed is similar to a special warranty deed, and is usually a product of negotiation by the grantee who requests certain protections.

When accepting a bargain and sale deed, the grantee cannot sue the grantor if any issues arise with the title. One exception is if the particular issue happens to be covered by a covenant. It’s recommended that grantees obtain a title search and title insurance if they are considering accepting transfer of a property through this type of deed (and any type of deed, for that matter.)

What is another name for a bargain and sale deed?

Curious minds often ask if there’s another name for a bargain and sale deed. This question comes up because bargain and sale deeds are often confused with quitclaim deeds. However, these two types of deeds are different and have several distinctions. We discuss the differences between a bargain and sale deed vs. quitclaim deed next.

Bargain and sale deed vs quitclaim deed: what’s the difference?

A bargain and sale deed offers more protection to the grantee than a quitclaim deed. As a refresher, a grantor who uses a bargain and sale deed is guaranteeing that they own the property outright. This means that no other owner has a stake to claim with regards to the property title. 

In contrast, a quitclaim deed provides no such warranties. It simply allows the grantor to convey their personal interest in a property, and nothing more. They are often used when the grantor doesn’t need to guarantee the title, or when the grantor’s title is unclear. 

They are often used in scenarios when no financial transaction is involved. Using a quitclaim deed, the property can be transferred between co-owners, friends, partners, family members, or between an owner and their LLC. Learn more about the quitclaim deed here.

How to create a bargain and sale deed

A bargain and sale deed is just one of many types of deeds that can be used for the transfer of property. This special type of deed offers minimal protection to the grantee, so if you are considering taking title to property using a bargain and sale deed, be extra careful. The onus is on you to understand that you’ll be accepting any risk associated with the property. There is nothing protecting you from claims against the property, unless you’re able to negotiate any specific covenants to be added to the deed. Be sure to carefully read any warranties or covenants enclosed in the deed to ensure you understand your legal rights and limitations.

If you’re interested in transferring property ownership for estate planning purposes, you may want to consider a quitclaim deed instead. These are commonly used to transfer your property interest to a loved one, such as your spouse or loved one. This is especially helpful when your property is jointly owned, such as by your spouse, and you simply want to transfer your interest such that they become the sole owner.

Another popular is the transfer-on-death deed. This type of deed is available in some states, and allows owners to transfer their property interest to a loved one automatically upon their death. It also removes the property from their personal estate and thus keeps it out of the probate process. 

The key lesson to be learned here is that there are many legal instruments at your disposal. The key is to conduct research, weigh the advantages and disadvantages of several options, and then ultimately select the tool that fits your needs best. 

Know that Trust & Will is here to support all of your estate planning needs! When you are in the process of buying, selling, or transferring property, it’s an important trigger event that should remind you to update your estate plan. This is a major asset change that can and will impact your estate plan, and thus you should attend to it immediately. You’ll want to ensure that your estate plan is up-to-date and doesn’t come into conflict with any of your real estate strategies. 

To get started, click here. You’ll be prompted to select the prompts that apply to you, and we’ll come up with the perfect estate plan that will meet your needs. This might include a Will, a Trust, and your Advance Directive, which has to do with planning for your future health care. You’ll be pleased when you find out that our estate planning products are affordable, and better yet, our intuitive platform is easy to use and you can complete your estate plan online!

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