Bargain vs. Sale

Attribute	Bargain	Sale
Consideration	May or may not involve money	Usually involves money
Transfer of Ownership	Transfers ownership immediately	Transfers ownership immediately
Intent	Intent to transfer ownership	Intent to transfer ownership
Formality	Less formal	More formal

Definition

When it comes to real estate transactions, two common types of deeds that are used are Bargain and Sale deeds. A Bargain deed is a type of deed where the seller does not make any warranties or guarantees about the property being sold. On the other hand, a Sale deed is a type of deed where the seller guarantees that they have the right to sell the property and that there are no liens or encumbrances on it.

Consideration

One key difference between a Bargain and Sale deed is the consideration involved. In a Bargain deed, the consideration may be nominal or minimal, such as one dollar. This type of deed is often used in situations where the property is being transferred between family members or as a gift. On the other hand, a Sale deed involves a more substantial consideration, typically the fair market value of the property being sold.

Warranties

Another important distinction between Bargain and Sale deeds is the warranties provided by the seller. In a Bargain deed, the seller does not provide any warranties or guarantees about the property. This means that the buyer is taking on the property "as is" and assumes any risks associated with it. In contrast, a Sale deed typically includes warranties from the seller, such as the warranty of title, which guarantees that the seller has the legal right to sell the property.

Liability

Because Bargain deeds do not come with any warranties, the buyer may have limited recourse if issues arise with the property after the sale. In some cases, the buyer may have to pursue legal action against the seller to seek redress. On the other hand, Sale deeds provide more protection for the buyer, as the seller is legally obligated to address any title issues or defects that may arise after the sale.

Recording

Both Bargain and Sale deeds must be recorded with the appropriate government office in order to be legally valid. Recording a deed provides notice to the public that the property has changed ownership and protects the buyer's interest in the property. Failure to record a deed can result in legal complications and challenges to the ownership of the property.

Transfer Taxes

When it comes to transfer taxes, Bargain deeds are often subject to lower taxes compared to Sale deeds. This is because Bargain deeds typically involve a lower consideration amount, which results in lower tax liability for the buyer. Sale deeds, on the other hand, may be subject to higher transfer taxes based on the fair market value of the property being sold.

Use Cases

Bargain deeds are commonly used in situations where the property is being transferred as a gift, between family members, or in other non-commercial transactions. These deeds are often used when the parties involved have a pre-existing relationship and do not require the same level of legal protection as a Sale deed. Sale deeds, on the other hand, are used in commercial transactions where the buyer expects certain warranties and protections from the seller.

Conclusion

In conclusion, Bargain and Sale deeds have distinct attributes that make them suitable for different types of real estate transactions. Bargain deeds are often used in informal or non-commercial transactions where the parties have a pre-existing relationship and do not require extensive warranties or protections. Sale deeds, on the other hand, provide more legal protections for the buyer and are commonly used in commercial transactions where the buyer expects certain assurances from the seller. Understanding the differences between Bargain and Sale deeds can help parties choose the right type of deed for their specific transaction needs.