What is a Bargain and Sale Deed?
What is a Bargain and Sale Deed?
A bargain and sale deed is a type of real estate conveyance instrument that transfers ownership of property from a seller (grantor) to a buyer (grantee) but offers limited assurances regarding the quality and condition of the title. Unlike a warranty deed, which explicitly guarantees the seller’s clear title and promises to defend against future claims, a bargain and sale deed conveys whatever interest the grantor has in the property at the time of transfer without necessarily ensuring that the property is free of encumbrances or title defects.
Key Characteristics:
- Limited or Implied Warranties:
A bargain and sale deed generally does not offer explicit warranties about the quality of the title. Instead, it implicitly suggests that the grantor possesses the right to transfer the property (i.e., they “bargain” the property and “sell” it to the grantee), but it does not guarantee that no other claims exist. In many jurisdictions, state laws may imply a covenant that the seller has not encumbered the property during their period of ownership, but the deed does not include a full set of protections like those found in a general warranty deed.
- Common Usage:
Bargain and sale deeds are often used in situations where the seller is not interested in assuming future responsibility for potential title issues. For example, government entities, fiduciaries (such as executors or trustees), or financial institutions selling foreclosed properties frequently use bargain and sale deeds. Such sellers often have no personal knowledge of the property's history and therefore cannot provide stronger warranties.
- Buyer’s Due Diligence:
Because it offers limited assurances, a bargain and sale deed places a greater emphasis on the buyer’s responsibility to conduct thorough title examinations, purchase title insurance, and ensure that they have a clear understanding of any potential liens, easements, or claims that may affect the property.
- Jurisdictional Variances:
The specific legal effects, implied covenants, and customary usage of bargain and sale deeds can vary by state or country. In some places, the deed is rarely used, while in others it may be a standard tool in certain types of transactions.
In essence, a bargain and sale deed conveys real estate from one party to another but provides less security to the buyer than a deed with full warranties. It serves as a middle ground between a quitclaim deed, which provides no warranties at all, and a warranty deed, which provides robust guarantees about the property’s title.
