Definition
A Bargain and Sale Deed is a deed where the grantor implies that they either currently hold or previously held an interest in a given property but do not provide any guarantees about the title’s validity to the grantee. Unlike other types of deeds like a General Warranty Deed or Special Warranty Deed, it does not protect the buyer against future claims arising from the actions or omissions of the grantor or past owners.
Examples
- Local Government Sales: Many municipalities use Bargain and Sale Deeds when selling properties acquired through tax foreclosures. The government entity implies ownership but offers no assurances against defects in the title.
- Foreclosures: Banks and financial institutions generally use this type of deed when conveying foreclosed properties. The bank indicates that it has taken ownership of the property but does not provide warranties regarding potential issues with the title.
- Transfer Between Known Parties: When property is transferred between known parties such as family members or related business entities, a Bargain and Sale Deed might be used to imply transfer without the rigor of warranties.
Frequently Asked Questions
What differentiates a Bargain and Sale Deed from other types of deeds?
A Bargain and Sale Deed implies that the grantor holds or held interest in the property but offers no title guarantees. This is different from a General Warranty Deed that ensures the grantee receives a clear title and protects against future claims, and a Quitclaim Deed which simply transfers whatever interest the grantor holds without expressly stating any status of interest.
Is a Bargain and Sale Deed risky for grantees?
Yes, it can be risky because the buyer does not have guarantees against defects in the title. Therefore, it is often recommended to perform thorough title searches or obtain title insurance to mitigate risk.
Who typically uses a Bargain and Sale Deed?
Governmental bodies dealing with properties acquired through non-payment of taxes, banks transferring foreclosed properties, and related parties in private transactions often use Bargain and Sale Deeds.
Related Terms
- General Warranty Deed: Offers extensive guarantees from the grantor that they hold a clear title, providing protection against any future claims.
- Quitclaim Deed: Transfers any interest the grantor has in the property without making any warranties regarding the title’s condition.
- Special Warranty Deed: Guarantees against defects and encumbrances only during the time the grantor held title.
Online Resources
References
- Snell, John. Understanding Deeds and Title Transfers. Real Estate Learning Series, 2018.
- Martin, Susan. Real Estate Principles. MBA Foundation Press, 2017.
Suggested Books for Further Studies
- Real Estate Deeds Demystified by Alexander Knight
- Property Law: Rules, Policies, and Practices by Joseph William Singer
- The Complete Guide to Real Estate Finance for Investment Properties by Steve Bergsman
Real Estate Basics: Bargain and Sale Deed Fundamentals Quiz
### What does a Bargain and Sale Deed imply?
- [x] The grantor implies that they have an interest in the property but does not provide any warranties of title.
- [ ] The grantor provides a full guarantee of a clean title to the property.
- [ ] The grantor transfers property with expressed warranties during their ownership.
- [ ] The grantor disclaims any interest in the property.
> **Explanation:** A Bargain and Sale Deed implies the grantor has or had interest in the property but does not guarantee the title's reliability.
### What makes a Bargain and Sale Deed different from a General Warranty Deed?
- [ ] Both provide the same level of warranties and assurances.
- [ ] A General Warranty Deed guarantees clear title only during the grantor's ownership.
- [x] A Bargain and Sale Deed does not offer title guarantees, while a General Warranty Deed ensures a clear title.
- [ ] A Bargain and Sale Deed ensures title guarantees against future claims.
> **Explanation:** A General Warranty Deed provides assurances against future title claims, unlike a Bargain and Sale Deed, which offers no title guarantees.
### Which type of property transfer commonly uses a Bargain and Sale Deed?
- [x] Foreclosures by banks.
- [ ] Sales by private landlords.
- [ ] Transfers between unrelated individuals.
- [ ] Real Estate Investment Trusts (REITs).
> **Explanation:** Foreclosures by banks frequently use a Bargain and Sale Deed as banks take possession without ensuring title reliability.
### What should a buyer do to mitigate risk when receiving a Bargain and Sale Deed?
- [ ] Nothing is required as the deed itself suffices.
- [ ] Ensure the grantor provides full warranty statements.
- [x] Perform thorough title searches or obtain title insurance.
- [ ] Only consider property inspections.
> **Explanation:** Buyers should mitigate risks associated with Bargain and Sale Deeds by performing thorough title searches or acquiring title insurance.
### Does a Bargain and Sale Deed ensure protection against prior title errors?
- [ ] Yes, it covers all past and future title issues.
- [x] No, it offers no protection against prior title issues.
- [ ] Only for issues during the grantor’s ownership period.
- [ ] Yes, for the grantor’s mistakes specifically.
> **Explanation:** Bargain and Sale Deeds do not offer protection against any prior title issues.
### Why might family members use a Bargain and Sale Deed?
- [ ] To provide total title security.
- [x] To simplify the transfer without providing warranties.
- [ ] To ensure comprehensive legal protection.
- [ ] To legally renounce property claims.
> **Explanation:** Family members may use a Bargain and Sale Deed to simplify the property transfer process without warranties.
### Does a Bargain and Sale Deed imply any warranty of title?
- [ ] Yes, it includes full warranty coverage.
- [ ] Yes, but only limited to grantor’s tenure.
- [x] No, it implies no warranty of title.
- [ ] Yes, for all future defects.
> **Explanation:** The nature of a Bargain and Sale Deed is such that it implies no warranties of title.
### Why might local governments prefer to use a Bargain and Sale Deed for property sales?
- [x] It transfers ownership without ensuring title condition.
- [ ] It guarantees clean titles are transferred to buyers.
- [ ] It limits the activity to specific buyer circles.
- [ ] It provides full refunds for any title issues.
> **Explanation:** Local governments use Bargain and Sale Deeds as it allows them to transfer ownership without ensuring the property's title condition.
### Which of the following is a key characteristic of a Bargain and Sale Deed?
- [ ] Full title warranty and protection.
- [x] An implied interest by the grantor without warranty.
- [ ] Specific warranties for past title defects.
- [ ] Implied assumptions of property insurance.
> **Explanation:** A key feature of a Bargain and Sale Deed is that it involves an implied interest by the grantor without providing any warranties.
### Are Bargain and Sale Deeds common in residential property sales?
- [x] No, they are more common in foreclosures and government property sales.
- [ ] Yes, they are the standard for residential real estate.
- [ ] Yes, because they ensure title protection.
- [ ] No, they violate residential property regulations.
> **Explanation:** Bargain and Sale Deeds are less common in standard residential sales; they are more frequently seen in foreclosures and government property transactions.
