Deeds are a staple of the real estate salesperson exam. They usually test two things: what a deed needs to be valid, and what each type of deed promises the buyer. The examples below draw on the California Department of Real Estate's Reference Book; your state's rules follow the same principles, with some local variation.
What a valid deed needs
When properly executed, delivered and accepted, a deed transfers title from the grantor (the person conveying) to the grantee (the person receiving). The essentials:
- It must be in writing.
- The parties must be properly described.
- The grantor must be competent to convey, and the grantee capable of receiving.
- The property must be described well enough to distinguish it from any other parcel.
- There must be a granting clause: words of conveyance, such as "I hereby grant."
- It must be signed by the grantor. (Note: the grantor, not the grantee.)
- It must be delivered and accepted.
Things that are not essential under California law: consideration, a date, witnesses, a seal, acknowledgment and recording. Exams like to test that distinction.
Related: What to Expect on Your State’s Real Estate Salesperson Licensing Exam
Acknowledgment and recording
A deed doesn't have to be acknowledged or recorded to be valid between the parties, but both are standard practice. Acknowledgment is a formal declaration before an authorized officer, such as a notary public, that the signature is genuine, and many documents can't be recorded without it. Recording gives public notice of the transfer and protects the grantee against later claims.
Delivery: the step people forget
A deed has no effect unless it is delivered, and "delivery" means the grantor intends to pass title now, not just that the paper changes hands. A deed handed over with instructions not to record it until the grantor dies is not a valid delivery. If the grantor wants conditions, the deed can go into escrow with instructions, to be delivered when the conditions are met. A deed found in the grantee's possession, or recorded, is presumed delivered.
The main types of deeds
- Warranty deed: contains express covenants, written promises about the title. The Reference Book notes it is uncommon in California, where buyers rely on title insurance instead.
- Grant deed: California's most common deed. Its promises are implied by law: that the grantor hasn't already conveyed the property to someone else, and that the property is free of encumbrances the grantor or anyone claiming under the grantor created, including taxes, assessments and other liens. It does not promise that the grantor actually owns the property.
- Quitclaim deed: makes no warranties at all. It conveys whatever interest the grantor has, if any. It's typically used to clear a "cloud on the title," such as a minor defect or a possible claim.
How to remember the difference
Line them up by how much the buyer is promised: warranty (the most, in writing), grant (some, implied by law), quitclaim (none). Exam questions often describe a situation, like clearing an old heir's possible claim, and ask which deed fits. That one is a quitclaim.