Warranty Deed: Definition, How They Work

A warranty deed is a legal document used in commercial real estate transactions to transfer property with a guarantee of clear title and buyer protection. The warranty deed enlists the description of the property along with any known encumbrances, such as easements, unpaid liens, or judgments. A warranty deed ensures no unresolved title issues with the property and that the grantor, the present owner, has the authority to sell to the buyer. Let us delve deeper and learn more about the warranty deed below.

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 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 title 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.

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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.

Purpose of a 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…”

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.

Benefits of a Warranty Deed

In real estate transactions, a warranty deed is a legal document with various advantages for the buyer and seller. The following are a few of the main benefits of using a warranty deed:

• Guaranteed Title Ownership: A warranty deed assures the seller that they're the rightful owners of the assets and have the authority to promote them, which is one of its major benefits. This guarantee aids in shielding the buyer from any potential claims or title-related difficulties in the future.
• Protection Against Title Defects: A warranty deed frequently contains undertakings or covenants from the seller promising to defend the title against future claims or defects. This means the seller is responsible for resolving disputes if a third party has a legitimate claim to the property.
• Increased Property Value: Due to the guarantee of a clear title, properties transferred with a warranty deed may be thought of as having more value in the real estate market. This may facilitate financing for bidders and enable sellers to demand higher prices.
• Smoother Real Estate Transactions: Using a warranty deed helps facilitate real estate transactions since it gives all parties involved clarity and legal protection. By doing this, disagreements and closing-process delays may be avoided.
• Easier Resale: Since their buyers will have the same level of guarantee of title, buyers who acquire property through a warranty deed may find it simpler to resell the property in the future.

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.

Benefits of Approaching a Lawyer for a Warranty Deed

See a lawyer for a warranty deed to assure the legitimacy and protection of your real estate purchase. A lawyer will handle the intricate legal processes, confirm the property's ownership, and precisely draft the deed. Their experience ensures a simple and secure property transfer by guiding the procedure and preventing upcoming problems.

• Possesses Legal Knowledge: Since lawyers are well-versed in contract law, they can be consulted while creating or reviewing a warranty deed. It can guarantee the contract's enforceability and compliance with all relevant laws and regulations.
• Prevents Dispute: A well-written warranty deed helps avoid conflicts and misunderstandings by clearly defining each party's obligations. A contract evaluated by legal advice may offer a stronger legal defense in a dispute.
• Protects Interest: By ensuring the agreement is fair and equitable, a lawyer can safeguard the interests of both parties. On behalf of the client, they can also negotiate advantageous terms and conditions.
• Offers Customization: Attorneys can modify the warranty deed to suit the parties' requirements and situations. They can include further terms or clauses that safeguard the interests of both the buyer and the seller.
• Helps in Resolution of Disputes: If there is a disagreement or dispute between the parties, a lawyer can aid in negotiations and resolve problems using the law, including mediation, arbitration, or litigation if necessary.
• Ensures Legal Paperwork: Attorneys ensure the warranty deed is correctly signed, notarized, and filed with the right government agency. This makes it easier to create a transparent and widely accessible record of the property transfer, which is essential for legal ownership and upcoming transactions.
• Guarantees Compliance: Lawyers can assure that the warranty deed meets the particular needs and regulations of the state or locality where the property is located.

Final Thoughts on Warranty Deeds

A warranty deed, in effect, offers the grantee the highest level of security because it gives precise assurances about the property's title and shields the buyer from any potential future title-related problems. In contrast to other deed types, including quitclaim deeds, which do not offer the same level of assurances regarding the property's title, warranty deeds are frequently utilized in real estate transactions in the United States.

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