Legally Speaking

There are several types of deeds by which property is conveyed in Wisconsin. One type of deed is a quit claim deed which conveys only the interest of the person transferring the property and nothing more. There is no warranty of title, meaning that the transferor does not guarantee that he/she has clear title to the property. Should there be a defect in the title, the transferor cannot be held liable.

A second type of deed commonly used in Wisconsin is a trustee’s deed. This deed is utilized to transfer property which is held in a trust. A trustee’s deed is similar to a quit claim deed in that a trustee cannot by law warrant title to property and therefore, there is no guarantee that title will be clear and free of encumbrances such as delinquent taxes, mortgages, judgments, and the like.

A third type of deed (and the most desirable) is a warranty deed. A warranty deed transfers title to property which the transferor guarantees to be “free and clear of all encumbrances” except for any exceptions expressly mentioned in the deed. This warranty guarantees the seller’s ownership rights only; it does not guarantee the quality of a building or other improvement(s) located on the property (if any) nor does it guarantee against any defects associated with the property, such as the presence of hazardous substances thereon. In other words, a warranty deed warrants title, not fitness or quality of construction or the absence of defects in the property itself.

A standard offer to purchase requires that the property being sold must be conveyed by a warranty deed, free and clear of all encumbrances with certain preprinted exceptions to title. A buyer of property should make certain that there are not any additional exceptions added to the standard language, and if there are any exceptions, what the exceptions take away from the quality of title.

Conversely, if one is selling property as a trustee, he/she will want to make sure that the offer to purchase provides that the property will be conveyed by a trustee’s deed and not a warranty deed, since a trustee cannot warrant title to property.

This column is based on general legal principles of Wisconsin law, is for informational purposes only, and is not intended to provide legal advice. Each legal matter must be judged on the merits of its unique circumstances. If you have a legal problem, consult an attorney.