What is a special warranty deed in real estate?
A special warranty deed is a type of real estate deed used to transfer property ownership from one person to another. By using this particular deed, the seller is guaranteeing to the buyer that there are no defects or problems with the property title during the time that they owned the property.
Why is it important to understand deed warranties?
Understanding deed warranties will help you to better protect yourself from Special and Limited Warranty Deeds that really aren't that special, and from the deeds that contain no protection at all. © 2022 Ward and Smith, P.A.
Is a special warranty deed better than a quitclaim deed?
Even though a special warranty deed is not as secure as a general warranty, they both offer more protection than a quitclaim deed. These deeds are used to facilitate the gifting of real estate between family, friends, or business partners.
What are the risk of a special warranty deed?
Risks of a Special Warranty Deed The risk involved for a buyer with a special warranty deed is that a prior creditor or owner could make a claim against the property, and there would be no guarantee from the seller who issued a special warranty deed.
Who benefits the most from a warranty deed?
The buyerThe buyer, or grantee, of a property benefits the most from obtaining a warranty deed. Through the recording of a warranty deed, the seller is providing assurances to the buyer should anything unexpected happen.
Why would you use a special warranty deed in Texas?
The Texas special warranty deed form provides a limited warranty of title. With a special warranty deed, the person transferring the property guarantees that he or she has done nothing that would cause title problems, but makes no guarantees about what might have happened before he or she acquired the property.
Which of the following is true regarding a special warranty deed?
Which of the following is TRUE regarding a special warranty deed? The grantor's warranties are limited to the time the grantor owned the property.
What type of deed offers the greatest protection of any deed?
warranty deedA warranty deed is a document often used in real estate that provides the greatest amount of protection to the purchaser of the property. The deed pledges or warrants that the owner owns the property free and clear of any outstanding liens, mortgages, or other encumbrances.
What is a special warranty?
A special warranty deed guarantees two things: The grantor owns, and can sell, the property; and the property incurred no encumbrances during his ownership. A special warranty deed is more limited than the more common general warranty deed, which covers the entire history of the property.
What is the best type of deed to get?
A Warranty Deed is the best of the best. It protects you from all future and past issues with property title and any outstanding debts or liens.
Who signs a special warranty deed in Texas?
After gathering either two Witnesses or a Notary Public, the Texas Grantor must sign his or her name. Keep in mind that the Texas County Recorder's Office where this paperwork is filed will only accept this document if it can be shown that the Texas Grantor's signature was properly witnessed or notarized.
What is the difference between a special warranty deed and a general warranty deed in Texas?
General warranty deeds predominate in sales of residential property. In a special warranty deed, title is warranted only from the grantor and no further back than that. The grantor's liability for title defects is therefore limited to his period of ownership up to and including conveyance to the grantee.
Which of the following is the distinguishing characteristic of a special warranty deed?
Which of the following is the distinguishing characteristic of a special warranty deed? It makes warranties only for the time the property was owned by the grantor.
What is a warranty deed used for?
A warranty deed is a document sometimes used in real estate, which offers the buyer of property the greatest amount of insurance. It guarantees or warrants that the property is owned by the owner free of any unpaid liens, mortgages, or other obligations against it.
What type of deed provides the grantee with the least protection?
quitclaim deedThe quitclaim deed, also called a non-warranty deed, offers the grantee the least amount of protection. This type of deed conveys whatever interest the grantor currently has in the property—if any. No warranties or promises regarding the quality of the title are made.
What is the best type of deed to get?
A Warranty Deed is the best of the best. It protects you from all future and past issues with property title and any outstanding debts or liens.
What is a warranty deed used for?
A warranty deed is a document sometimes used in real estate, which offers the buyer of property the greatest amount of insurance. It guarantees or warrants that the property is owned by the owner free of any unpaid liens, mortgages, or other obligations against it.
What is the most common type of warranty deed?
General warranty deedGeneral warranty deed: A general warranty deed is the most common type of deed used to transfer fee simple ownership of a property. Unlike a quitclaim deed, a general warranty deed does confirm a grantor's ownership and a legal right to sell.
Which deed provides the highest degree of title protection?
General Warranty DeedGeneral Warranty Deed It offers the highest level of protection to the buyer because it guarantees that there are absolutely no problems with the home – even dating back to prior property owners. This quality of coverage is why most lenders will require you to get a general warranty deed when buying your house.
What is a special warranty deed?
A special warranty deed is considered as a deed for real estate in which the seller of the property – known as the grantor warrants against anything that occurred during physical ownership.
Types and differences between the property deeds
Traditionally, General warranty deeds are most preferred because it provides the broader protection for the property purchasers as the sellers continuously provide warranties of the property from the beginning of time.
General vs special warranty deed: Which one should I use?
Whenever financial transactions are involved, buyers are most inclined towards the proper and complete transfer of assets. The majority of the property transactions demand general warranty deeds which provide no hesitation to face any ramifications after the transfer of the estate in the future.
Why do you need a warranty deed?
A special warranty deed offers significant liability protection to sellers, which might help explain why sellers use it when they’re not sure about a property’s history. Some common scenarios in which sellers use special warranty deeds include: 1 Bank-owned properties due to a foreclosure, since the bank might not know the full history of the title, and the foreclosure history suggests there might be a history of title issues and debts. 2 Commercial properties that have changed ownership several times. For instance, a commercial vendor that purchases a building from an individual who purchased the building at a foreclosure auction might use a special warranty deed, since the property’s long history makes it difficult to assess the status of the title.
What to do if the other party offers you a warranty deed?
If the other party offers you a special warranty deed, begin by asking if they’d consider a general warranty deed. Some grantors simply gravitate to special warranty deeds as a force of habit, but requesting another deed may convince the grantor to provide it in order to get your business.
Can a special warranty deed open the door?
A special warranty deed can open the door to the property of your dreams, but they are not without risk. Save time and money by contacting an attorney to find out if a special warranty deed is right for your situation.
Do you need title insurance on a deed?
If you purchase property with a special warranty deed, title insurance is a must—and if you have a mortgage, your lender will probably require it anyway. Title insurance protects lenders and purchasers against undiscovered defects in the property’s title, and helps resolve issues if they arise. It’s important to note that the title insurance policies most lenders require protect only the lender’s interest in the property. If you’re concerned about title defects, or a title search has revealed there might be issues, you may want to consider investing in an owner’s title insurance policy.
Why do we use special warranty deeds?
Perhaps one primary reason for the use of special warranty deeds is because the selling authority has no wish to be liable for any situation concerning the property before the seizure. For example, in 2012, a couple with a home in Grenada County, Mississippi, defaulted on the loan payments on the property.
What is the difference between a special warranty deed and a general warranty deed?
However, the primary difference between a special warranty and a general warranty deed is how they deal with the timeframe of protection given to title ownership.
What is warranty deed?
The general warranty deed assures the buyer they are obtaining full rights of ownership without valid potential legal issues with the title. With a special warranty deed, the guarantee covers only the period when the seller held title to the property.
What is the name of the seller on a deed?
Both the general and special warranty deeds identify: The name of the seller—the grantor. The name of the buyer—the grantee. The physical location of the property. The property is free of debt or encumbrances other than those noted in the deed. The grantor warrants that they are the rightful owner of the property and have a legal right ...
How long does it take to sell a house after a warranty deed?
After 10 years they put the home on the market, and you buy it using a special warranty deed. A few years later you decide to sell the home. However, because the code enforcement liens remain against the property, they could encumber your sell.
What does a grantor warrant?
The grantor warrants that they are the rightful owner of the property and have a legal right to transfer the title. The grantor warrants that the property is free-and-clear of all liens and that there are no outstanding claims on the property from any creditor using it as collateral.
Does title insurance cover warranty deeds?
Special warranty deeds provide narrow protection for the grantees or buyers. Special warranty deeds cover only the period of ownership of the grantor or seller.
What Is a Deed?
A deed is a written document that effectively transfers the rights of a particular asset from one owner to another. Deeds are generally used to transfer the title for real property – such as land and anything on that land – or vehicles.
Types of Deeds
There are a few different types of deeds that you may encounter. The most common are the general warranty deed, quitclaim deed, special purpose deed (such as a gift deed or executor’s deed) and the special warranty deed.
Special Warranty Deeds: Definition, Uses
A special warranty deed works a bit differently, though. With a special warranty deed, a grantor is still responsible for naming any encumbrances on the property. This may include things like judgments and tax liens or property easements.
Special Warranty Deeds: How to Protect Yourself
Since a special warranty deed offers less protection than a general warranty deed, buyers may feel reasonably cautious about their purchase.
The Bottom Line
There are many issues that can follow a property. Also called title defects, these issues include things like judgments, tax liens or easements … and if you’re buying a property with one of these defects, you will generally inherit the problem.
Tips on Real Estate
Consider working with a financial advisor as you buy or sell real estate. Finding one doesn’t have to be hard. SmartAsset’s matching tool can connect you to several financial advisors in your area within minutes. If you’re ready, get started now.
What is a special warranty deed?
A special warranty deed transfers title from one owner (called a grantor) to another owner (called a grantee ). The title is transferred with a limited warranty of title. By signing the deed, the grantor promises that—for as long as the grantor has owned the property—nothing has happened that would cause title issues for the grantee.
Who is responsible for title issues in a special warranty deed?
Special warranty deeds place some risk on the grantor and some risk on the grantee. The grantor is legally responsible for any title issues that arose while the grantor owned the property. The grantee assumes the risk of any title issues that arose before the grantor owned the property.
What is a quit claim deed?
A quitclaim deed (also known as a quit claim deed and sometimes erroneously called a quick claim deed) provides no warranty of title. Because a special warranty deed provides a limited warranty of title, it provides more protection than a quitclaim deed. A warranty deed (also called a general warranty deed) provides a full warranty ...
What are the features of a valid legal description?
These features include: A valid legal description; A statement of the consideration changing hands or statement that the deed is without consideration; If there is more than one grantee, a statement of the manner in which the grantees will hold title;
Can a deed be a warranty of title?
If a deed makes a warranty of title, the transferee can sue the transferor over any title issues. The designation of a deed as a special warranty deed identifies the warranty of title. The warranty provided by a special warranty deed is limited in the sense that it only covers the period when the grantor owned the property.
Is it a crime to use a warranty deed in Michigan?
Using a generic form is dangerous. A special warranty deed that is valid in one state may be a crime in another state. For example, Michigan law makes it a crime to use the word “warranty” in any deed that does not convey a full warranty of title.
Is a covenant deed common law in Michigan?
In others, like Michigan, special warranty deeds (called covenant deeds in Michigan) are accepted under common law. Even in states that provide statutory language, the deed must take into account the other elements of a deed. These features include:
What happens if you get a special warranty deed?
You received a special warranty deed claiming the seller was free and clear of any legal issues and now you have the rights to the property. Unfortunately, the original owner did not pay their property taxes and the county has a lien on your building.
Why do you need a warranty deed?
The warranty deed is needed to ensure the new owner’s valid interest and give them legal recourse against any future property claims.
Why do you need title insurance?
Title insurance is particularly helpful to those who receive a special warranty deed to help protect their finances and ensure they are mitigating risk. As always, it is important to obtain guidance from a real estate lawyer if you are inexperienced and attempting to enter a binding agreement.
What is a general warranty?
A general warranty confers full rights of ownership and disposal to the buyer. In order to ensure they won’t face title challenges, buyers should verify that the property in question features an “unbroken chain” of general warranty deeds stretching far back in time.
Does a deed warranty matter?
As long as your transfer of property doesn’t cause any problems, it shouldn’t matter what type of deed you receive. Unfortunately, title problems do arise, and the type of deed warranty you received will make a big difference to you. A common problem that arises occurs with office buildings.
Can you have encumbrances against real estate?
There are no encumbrances against the real estate. Those encumbrances could include an easement on the property, a judgment lien against the property, or anything else that could impact the use of the property or can control how to use the real estate.
Can a property be transferred between buyers and sellers?
Surprises. Real estate professionals know that there are several commonly accepted means for a property to be transferred between buyers and sellers. Different methods of transfer are used in superficially similar situations depending on the nature of the sale and the identity of the parties to the transaction.
