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Hawaii Conveyance Document Basics: Indeed There is More Than One Kind of Deed

Are all deeds created equal? It depends. There are basically three different types of conveyance documents used in Hawaii. Here are the basics.

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Regular Warranty Deed

A regular warranty deed contains many covenants from the grantor. Among them, there’s a covenant that the owner really owns the property, that the property is being conveyed without undisclosed encumbrances, but most importantly, that the grantor will “warrant and defend” title to the property forever. The language of the covenants implies that the grantor has had some level of personal involvement or relationship with the property.

A special or limited warranty deed, on the other hand, only warrants that the owner has the right to convey the property and nothing has been done during their ownership to cause a defect in the title. Grantors such as bankruptcy trustees, personal representatives, lenders or successor trustees take title only for the legal purposes. They routinely convey by way of a limited warranty deed.

Limited Warranty Deed

The increased use of a limited (special) warranty deed may be a sign of the times. In times past, these were mostly used by C. Brewer or other large land owners. For residential real estate, use of a special warranty deed was the exception, not the rule. Foreclosures have changed this. Buyers (grantees) of foreclosed properties sometimes become concerned when they learn they are not getting a general warranty deed. The perception is that they are exposed to greater risk.

With any foreclosure, all third party claims should be wiped clean. Recent concerns with (especially) non-judicial foreclosures make this less certain. When property is conveyed with this type deed, I recommend that buyers pay a bit extra for an upgraded/enhanced title policy.

Quit Claim Deed

Quit (not quick) claim deeds are a highly misunderstood and often misused conveyance. With a quit claim, the grantor conveys anything they own, even if it is nothing. These are commonly used to correct title defects or between siblings who wish to convey their interest to a brother or sister. A relationship between parties is probably safest. Be sure to arrange title insurance early on if a quit claim was the last conveyance.

As with a deed-in-lieu, the deed may transfer title but the title insurer won’t issue an insurance policy unless they are given positive confirmation that all parties were fully informed with no undue pressure.

Bottom Line

Bottom line, hope for a warranty deed, accept a special warranty deed, and be cautious with a quit claim. Knowing when to expect different types of deeds can be as important as what’s actually in the deed. Your REALTOR® will be able to recommend a good local real estate attorney who can best advise you in your situation!

If you have any questions, or would like to know more about deeds, feel free to contact me.

About the Author

Denise Nakanishi

Denise Nakanishi is a REALTOR Broker with Hawai'i Life. Denise Nakanishi is one of Hilo's most acclaimed real estate agents. She reached the rank of Major in the US Army and is now known by many as "Major Mom." The nickname fits–not only does Denise bring the discipline and mission-oriented attitude you'd expect, she's also caring and compassionate, always looking out for her clients like they're her own family. Having made the Big Island her home since 1987, Denise combines her extensive knowledge of the area with a sharp focus on customer service and the results speak for themselves. She's the recent recipient of the Best East Hawai`i, Best of Zillow, Chairman's Circle Award, President's Circle, Top Producing Agent since 2001, and Realtor of the Year awards. Denise stays ahead of the curve because she's passionate about education–she served as Education Chair for Hawaii Island REALTORS® for many years. She's one of Big Island's best real estate resources, known for her weekly article in the Hawaii Tribune Herald. Denise leads Team Nakanishi for Hawai`i Life, who is committed to their family, work, and community. In her little time away from work, Denise is a committed runner and Grandy. She also devotes many hours to various Veterans' Organizations, the East Hawaii Cultural Center, and the Hawaii Island REALTORS®. You can email me at denise@hawaiilife.com or via phone at (808) 936-5100.

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Clair C. Wilson

July 27, 2017

Cool. Thanks. Something that makes sense!

Michael

April 29, 2019

Man, what a crazy story. I’ll probably share this with some of my friends. Thanks again for posting it.

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