A bargain and sale deed without covenants is one type of instrument that can be used to convey land from a seller, known as the grantor, to a buyer, or grantee. However, it might not always be in a buyer's best interest to purchase land with this type of deed. In fact, it could pose problems for the buyer down the road.
How Is Real Property Traditionally Conveyed?
In most parts of the United States, real property is typically conveyed by grantor to grantee through a deed with warranties. These warranties serve as protection for the buyer, because they guarantee that the seller is willing to defend the title of the property should any claims against the property--such as a lien--arise. General warranty deeds guarantee the title of real property from the time it was first conveyed, while deeds with special warranties guarantee the real property against claims that arise from the time the grantor had ownership.
What is a Bargain and Sale Deed Without Covenants?
A bargain and sale deed without covenants contains no warranties. Merriam-Webster's Dictionary of Law defines this deed as a contract that results from a bargain between a seller that creates a use in the buyer, thereby transferring the title by operation of law. "Without Covenants" means that the deed does not contain "Covenants Against Grantor's Acts." While encumbrances against the property, such as a tax lien, are often stated in the deed, a defect in the title might not be apparent from examination of the property records.
When Might I Get a Bargain and Sale Deed to My Property?
When banks foreclose on property, it goes up for auction to the public. Similarly, if a property owner does not pay his or her ad valorem taxes, the county can take the property and sell it at what is known as a "sheriff's sale." The highest bidder for the property must pay for it in full with a cashier's check. Bargain and sale deeds without covenants are the usual instrument for conveying property that is purchased through these types of auctions.
What's Does a Bargain and Sale Deed Look Like?
A bargain and sale deed without covenants is a very simple document. It provides the date the property was sold, the names of the seller and buyer, the amount paid, the type of estate granted and a legal description of the property. If there are any known encumbrances, such as back taxes owed for the property, these will be also included. A bargain and sale deed without covenants contains very specific language that states that the seller has not "done or suffered anything whereby the said premises have been encumbered in any way whatever."
The Hidden Dangers of a Bargain and Sale Deed Without Covenants
While the purchase of real property through a public auction might indeed give a buyer a good "bargain," there are scenarios that might arise down the line. First, title companies are reticent to provide insurance for deeds that do not contain any sort of warranty. Second, a spouse or family member of the former property owner who does not divest his or her interest in the property by signing a quitclaim, may come back in the future and lay claim to the title. If you have questions about the pros and cons of purchasing property with a bargain and sale deed without covenants, it is recommended that you first talk with a real estate attorney.