What You Don’t Know Can Really Hurt You
Choosing a Florida deed isn’t as easy as it might seem, and choosing the wrong deed can be disastrous! Using the right deed is essential to meet your goals for the property transfer you are planning. Using a deed ‘form service’ provides a generic form but does not address your personal situation and does not help you decide on which deed is right for you, or advise if you even need a deed.
Each type of Florida deed has specific statutory requirements for the information included, the manner of signing and notarization, the recording, and the payment of transfer taxes.
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Florida Deed Types
- Quit Claim Deed – One of the most used deeds, the quit claim deed is just what it says: The grantor ‘quits’ all claim to the property and transfers it ‘as is’, liens, judgments and all. The grantor may not even have title to the property. Because of the lack of any warranties, this deed is best used between parties who know each other.
- Lady Bird Deed – A special deed with tremendous benefits for grantors (owners) who wish to keep their property and name a remainderman (beneficiary) who will receive the property on the grantor’s death. This deed avoids probate and there are no transfer taxes or other costs. The remainderman simply records the grantor’s death certificate and the transfer is automatic. This deed allows the current owner to preserve a homestead exemption, comply with mortgage requirements, keep the property out of “Medicaid” assets, avoid reassessment, and remain in complete control of the property until death. The owner can even ‘undo’ the deed by creating a new deed of any type.
- Warranty Deed – A warranty deed offers a buyer the highest degree of protection from encumbrances on a property title. The warranty deed guarantees that the seller legally owns the property and promises that there are no outstanding liens or encumbrances. The warranty deed also guarantees that the title is free of any defects even before the seller took possession of the property. If the title is found to be defective or have an encumbrance against it after the buyer purchases it, the seller may be held liable for any damages. It is important to note that while a warranty deed provides certain remedies for a buyer, should the title to the property have claims against it after it is purchased, these remedies are based on the solvency of the seller. If the seller dies or files for bankruptcy, the guarantees made on the title may have little or no value.
- Corrective Deed – An error such as a typographical mistake or omission in sections of an original deed may be corrected with a “corrective deed.” A corrective deed must have the same required elements for any Florida deed to be valid. While a corrective deed can be used in certain limited circumstances, a Curative Notice may be used in other specific situations. Many other errors will require more complex remedies such as a quiet title action, or reformation complaint, both of which are legal suits.
Florida Deed Requirements
In Florida, information required in your deed is determined based on various facts including your marital status, whether the property being transferred is your primary residence or not, who is receiving the transferred property and many other categorical requirements.
A valid Florida deed must meet the following requirements:
- Be in writing
- Contain the property’s current owners (grantors) and new owners (grantees) names and mailing address
- Include a ‘prepared by’ provision that states the name and address of the natural person that prepared the deed (as opposed to an organization)
- Be signed by each current owner
- Be signed by two subscribing witnesses along with mailing addresses
- Be properly notarized (There are special requirements for the notary block. It is an acknowledgment, not an oath) and must include check boxes for physical presence or online notarization.
While these are the statutory requirements for any deed, they are just the bare bones needed for a valid instrument of conveyance in Florida. Navigating the non-codified requirements for a specific deed in Florida can be complex, so understanding the circumstances surrounding your transfer can make the difference between a valid deed that accomplishes your goals or a fatally flawed deed that not only may render your transfer ineffective but will go undiscovered until a future transfer is attempted.
Get more information on Florida Statutes Real Property.
Common Deed Traps
- Even if your spouse’s name is not on the current deed, he or she will be required to sign a deed transferring a primary residence.
- If the property is encumbered by a mortgage, transferring it to someone else may violate the Due On Sale clause of that mortgage and your loan may be called.
- Putting your child on your deed opens you to many potential liabilities: Your child’s creditors can lien the property; you might be subject to transfer taxes if there is a mortgage; you may lose your homestead exemption unless the proper specific titling language is present on the deed. It’s almost always better to use a Lady Bird Deed.
- Florida Transfer Tax (called Documentary Stamps) may be due when you execute the deed. There are several exceptions but the code is complex. DOC stamps tax can be quite significant and failure to pay or underpayment penalties are severe. (This is another situation where the Department of Revenue may contact you years later once penalties and interest have ballooned.)
- The transferred property may be reassessed for property tax purposes. Again, there are exceptions but the laws are unclear and complex. For property acquired some time ago, a reassessment can mean thousands more in property taxes! Also, deeding non-homestead property to an LLC causes reassessment and loss of the property tax cap even if the LLC is 100% owned by the grantors.
- Deeding property to multiple owners may prevent using the homestead exemption on a primary residence unless specific titling language is included.
- A Quit Claim Deed between spouses pursuant to a divorce may not prevent the need for the ex-spouse’s signature on a subsequent transfer of the property depending on the language in the marital settlement agreement and final divorce decree.
- Transferring a time share? Just a deed may not accomplish the transfer. Each time share entity has its own policies and rules for transferring shares. Check with them before attempting to transfer ownership with a deed.
- Under Florida Law, an unrecorded deed that is notarized and delivered, will be valid as between the parties (the grantor and grantee). However, as far as creditors or purchasers, an unrecorded deed is void because there was no notice of the transaction. Deeds are usually recorded upon execution as a practical matter to avoid any future ownership issues.
Understanding the many little-known facts surrounding deed transfers is important for making informed decisions about deeding your property.
Every situation is different and the nuances involved in property ownership and previous deeds can be very complicated. There is always a ‘right way’ to complete a property transfer, but lack of all the information necessary can lead to fatal deed errors.
Visit us at myfloridadeed.com for help with your deed. Having a knowledgeable guide can make all the difference and with our experience we guarantee the right deed for your needs!