South Dakota Quitclaim Deed With Covenants Form
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What Is a South Dakota Quitclaim Deed with Covenants Form?
In South Dakota, a quitclaim deed with covenants is a legal document used to transfer real estate ownership from a seller to a buyer.1 A quitclaim deed with covenants provides a limited warranty of title to the new owner. The limited warranty guarantees a good title, but the guarantee only covers title problems that occurred while the seller owned the property.2 In other words, the seller guarantees that the property was free of defects that arose while he or she held title but makes no guarantees as to the condition of the title before the seller took ownership of the property.
What Is Warranty of Title?
A warranty of title is a legal guarantee that the seller of a property provides to the buyer. A seller who provides a complete warranty of title guarantees that the deed will transfer a valid and marketable title to the property and that there are no undisclosed liens, assessments, taxes, or encumbrances that affect the property.3 The seller also agrees to accept responsibility for resolving or compensating the buyer for any title issues that are identified.
The warranty helps to protect a buyer from title problems by placing the financial risk of title problems on the seller. The buyer can sue the seller for breach of warranty if a title issue covered by the warranty is identified.4
A South Dakota quitclaim deed with covenants has a limited warranty of title that consists of two legal promises from the seller:
- The seller guarantees that he or she has not transferred the property—or any interest in the property—to anyone but the new owner prior to signing the deed.
- The seller guarantees that property is free from liens, mortgages, or other encumbrances resulting from any action or inaction of the seller.5
The limited warranty provided under a quitclaim deed with covenants covers potential title problems caused by the seller but does not cover every potential issue with the property’s title.
Other Names for a South Dakota Quitclaim Deed with Covenants Form
South Dakota uses the term quitclaim deed with covenants for a deed that provides a limited warranty that covers title issues created or allowed by the seller. Other states have different names for deeds that provide a limited warranty of title. The most common name is special warranty deed. Other variations include:
- Limited warranty deed (In states like Ohio and Kansas)
- Statutory warranty deed (in Alabama)
- Grant deed (in California)
- Covenant deed (in Michigan)
- Bargain and sale deed (in Nevada, New York, and Washington)
Each of these terms refer to a legal document that provides a limited warranty of title from the seller to the buyer.
How Do South Dakota Quitclaim Deed with Covenants Forms Relate to Other Forms of Deeds?
South Dakota recognizes several types of deeds that can be used to transfer ownership of real estate. The deeds differ in how they allocate the risk of title problems. A quitclaim deed with covenants splits the risk between the current owner and the new owner. Two other deed forms assign all risk to the current owner who makes the transfer (warranty deeds) or to the new owner (quitclaim deed without covenants).
- South Dakota warranty deed form. A South Dakota warranty deed form provides the buyer with the strongest protection because the seller bears all risk of undisclosed title issues. A warranty deed provides a complete warranty of title to the buyer. This means that the seller warrants against any defects in the title, whether they occurred during the seller’s ownership of the property or before.6
- South Dakota quitclaim deed without covenants. A South Dakota quitclaim deed without covenants provides no warranty of title whatsoever. This means that the seller makes no guarantees about the condition of the title and simply transfers whatever interest they may have in the property to the buyer. South Dakota law assumes that quitclaim deeds provide the two covenants described above, so a quitclaim deed without covenants must expressly disclaim any warranty or covenants of title.7
The parties to a South Dakota real estate transfer should consider the warranties provided by each type of deed when deciding which type of deed to use. Factors like the parties’ existing relationship (if any), knowledge of the property’s history, and the consideration (if any) given for the deed can influence the type of deed that is appropriate under the circumstances of the transaction.
South Dakota Title Insurance and Quitclaim Deed with Covenants
Title insurance is a type of insurance that protects a buyer and/or a lender from financial loss if there are defects in the property’s title. A title insurance policy can be a good supplement to the protection provided by a quitclaim deed with covenants—which only covers defects in the title that occurred due to events caused or permitted by the seller. Title insurance adds to this protection by covering title issues at any point in the property’s ownership history (as long as the issue is not specifically excluded by the policy). Title insurance ensures a reliable payment source (the insurance company) and protects the buyer from title defects that may have arisen before the seller took title.
South Dakota Quitclaim Deed with Covenants Forms and Other South Dakota Deeds Used in Estate Planning
The deeds described above are distinguished by the warranty (or lack of warranty) that the new owner receives. South Dakota estate-planning deeds are defined by how they are used to avoid probate as part of the owner’s estate plan.
- South Dakota life estate deed. A life estate deed lets a property owner keep a lifetime ownership interest (the life estate) and give to another person (the remainder beneficiary) the right to future ownership after the current owner’s death. When the owner dies, title to the property automatically passes to the remainder beneficiary without probate. During life, the owner can still use and possess the property but can sell or transfer the property only with the remainder beneficiary’s consent.
- South Dakota transfer-on-death deed. A South Dakota transfer-on-death deed (or TOD deed) is an estate-planning document that allows an owner to name another person (the beneficiary) who will take title effective upon the owner’s death.9 While the owner is still alive, he or she keeps complete ownership and control over the real estate—including the right to revoke or amend the TOD deed or to transfer or sell the property without involving the beneficiary.
Common Uses of South Dakota Quitclaim Deed with Covenants Forms
A South Dakota quitclaim deed with covenants is commonly used in commercial real estate transactions. Commercial buyers are generally assumed to have greater knowledge of the property’s condition and history and are often willing to accept a limited warranty of title.
A quitclaim deed with covenants may also be used for:
- Transfers from a trustee, executor, or other fiduciary;
- Sales by a bank or other financial institution after a foreclosure; or
- Transfers of a property when the parties are aware of a potential title issue that will not be resolved before the transfer.
How to Create a South Dakota Quitclaim Deed with Covenants
As with any deed, a South Dakota quitclaim deed with covenants should be customized to reflect the specific terms and conditions of the transaction. Reliance on fill-in-the-blank forms can lead to invalid documents and future title issues.
A South Dakota quitclaim deed with covenants must meet South Dakota’s legal requirements for a valid, recordable deed. Generally, the deed must be in the right format and contain the information needed to describe the transfer—such as the names of the buyer and seller, a legal description of the property, a statement of consideration, (South Dakota deeds often state nominal consideration), and any other terms of the sale.
A quitclaim deed with covenants must also have the language needed to include the limited warranty of title that the seller is providing. A South Dakota deed that uses the words remise, release, or quitclaim includes the two implied covenants associated with quitclaim deeds with covenants.10 The parties may choose to modify, amend, or add to the covenants within the express terms of the deed.
The owner who is transferring the property must sign the original deed, and the deed must be notarized. The properly executed deed should then be filed for recording with the register of deeds of the county where the property is located.
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