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What is a Warranty Deed?
A warranty deed, or general warranty deed as it is sometimes called, is a legal document used in real estate transactions. When a seller transfers property to a buyer, a warranty deed is used to ensure that the title of the property being transferred is valid and free from any issues.
Out of all the different types of property deeds, which also include special warranty deeds and quitclaim deeds, the warranty deed provides a buyer with the highest level of protection.
To execute a warranty deed, the seller of the property must make certain promises to the seller which normally include:
- The seller is the legitimate owner of the property and holds a clear title to the property.
- There are no liens, encumbrances , or mortgages against the property.
- The seller has the legal right to sell the property.
- The title will withstand third-party claims to ownership of the property.
- In the future if there is a title issue, the seller is liable for all legal issues.
A warranty deed is most commonly used deed in residential real estate. In most cases, in order for a buyer to get financing to purchase a home, the title needs to be clear, and a warranty deed must be used in the transaction.
For more information about warranty deeds, read this article.
Special Warranty Deed
Another type of warranty deed is a special warranty deed , or a grant deed. These can easily be confused with a general warranty deed; however, a special warranty deed does not offer the same protection to buyers.
A special warranty deed only guarantees that there are no encumbrances on the property for the period of time the seller had the property tile in their name. This means that the seller is not liable for any title issues that could have happened before they took ownership.
This type of deed poses a risk for a buyer because they will have no legal protection for any potential title issues that could arise after the real estate transaction is complete.
Purpose of Warranty Deed
The purpose of a warranty deed is to protect the buyer when purchasing real property. A warranty deed is also usually required to secure financing or title insurance for the purchase of a property.
When executing a warranty deed, the seller is required to make legally binding promises, or covenants, and warranties to the buyer. These warranties include:
- Covenant of Seisin: Assures that the seller owns the property and can legally sell it.
- Covenant Against Encumbrances: Assures the buyer that the property is free from liens unless specifically stated in the deed.
- Covenant of Quiet Enjoyment: Guarantees that the buyer will have the right to quiet possession of the property and will not be inconvenienced by a defective title.
- Covenant of Further Assurance: Assures that the grantor will provide any documents necessary to make sure the title is legitimate.
Warranty deeds are most commonly used when buying a house or property from a person you do not personally know.
What’s Included in A Warranty Deed?
Each state will have its own requirements for what needs to be included in a warranty deed, however, there is basic information that is common to have on any warranty deed. This information includes:
- The identities of both the grantor (seller) and grantee (buyer) and their addresses.
- A detailed description of the property which should include property lines, roads, sewer lines, and any other defining characteristics.
- Words of conveyance that shows the seller is granting the property to the buyer.
- Proof of consideration like the amount of money paid for the property, or language that shows that the property was gifted to the grantee.
- Signatures of both the grantor and grantee
- In most cases, a notary public acknowledgement
A warranty deed, specifically, should also include language that makes a guarantee that the title to the property is clear. This statement may say something like:
“…said property is free and clear from all liens and encumbrances except as herein set forth, and except for taxes due for the current and subsequent years, and except for restrictions or easements of record and that the Grantor shall warrant and defend the same to said Grantee…”
For more information on what should be included in a deed, read this article.
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Does a Warranty Deed Prove Ownership?
A warranty deed by itself does not prove ownership of a property and it is necessary to also have evidence of title of the property. If a deed contains an error, another party could potentially have a claim to that same property.
A warranty deed offers a buyer the guarantee that they will own the property free and clear and if there is a title issue, the seller will be held liable. A buyer should always do their due diligence however and conduct a title search to be sure there are no defects. If a buyer is unsure how to conduct a title search, consulting a property law attorney could be helpful.
Even though a warranty deed provides a buyer with the most protection of any property deed, it is still recommended that a buyer purchases title insurance as well. Title insurance will protect a buyer from any losses that may occur during ownership of the property due to title defects.
Warranty Deeds vs. Quitclaim Deeds
A quitclaim deed is similar to a warranty deed in that it transfers ownership of a property, however, it offers the least amount of protection to the buyer. Some states refer to this deed as a non-warranty deed.
A quitclaim deed simply transfers the grantor’s interest in the property to the grantee without any of promises or warranties that the title is valid that a warranty deed provides.
If there is an issue with the title, the grantee has no legal protections under a quitclaim deed like they would with a warranty deed. For this reason, a quitclaim deed is used specifically when the grantor is not sure if the title is defective and wants to avoid liability.
A quitclaim deed is also often used when there is no money being exchanged for a property like when a parent transfers property to a child or one spouse transfers property to their partner. A warranty deed is most often used when purchasing property from a stranger.
How To Get a Warranty Deed?
Warranty deeds are most commonly obtained through a local real estate agent’s office. It is also possible to download a warranty deed template from an online resource to fill out on your own.
Before obtaining a warranty deed, you should be sure of the following:
- The property has no liens
- The property has no current claims to it
- There are no encumbrances on the property
This information can be found through a public records search.
Whether you are using a local realtor or handling the transaction privately, a warranty deed should always be executed in the presence of a notary public to be legally binding.
Click here to learn more about property liens that may interfere with a property you want to purchase.
Get Help with A Warranty Deed
Do you have questions about a warranty deed and want to speak to an expert? Post a project today on ContractsCounsel and receive bids from real estate lawyers who specialize in warranty deeds.
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