SPECIAL WARRANTY DEED: DEFINITION, USE, VS. GENERAL WARRANTY DEED

SPECIAL WARRANTY DEED: DEFINITION, USE, VS. GENERAL WARRANTY DEED

What is a special warranty deed?

A special warranty deed is a real estate title deed in which the seller of the property, known as the grantor, only warrants against everything that occurred during their physical ownership. In other words, the landlord does not guarantee against obvious domain defects existing before the entry into possession of the property.

How a Special Warranty Deed Works

Special security deeds are most commonly used with commercial real estate transactions. Transactions in single-family real estate and other residential property generally use a general deed. Many mortgage lenders insist on the use of the general warranty deed.

Special warranty deeds go by many names in different states, including covenant deed, grant deed, and limited warranty deed. The guarantee covers only the period in which the seller owns the property with a specific guarantee deed. Special warranty deeds do not protect against free and unequivocal title defects that may pre-exist the seller's property.

Thus, the grantor of a special warranty deed is only liable for any debts, troubles, or other encumbrances on the title that he or she caused during your ownership of real property. The dealer is responsible for any issues arising from the previous owners. What Is A Statutory Warranty Deed?

general warranty deed

A warranty deed provides for the transfer of ownership or title to commercial or residential real estate and comes with certain warranties provided by the seller. These warranties include that title to the property is transferred without any claims of title, liens, or outstanding mortgages or other encumbrances by any person or entity other than the seller.

The general warranty deed covers the entire history of the property and guarantees that the property is free and free of defects or encumbrances, whether they occurred or under whose domain. The general warranty deed assures the buyer that they obtain all rights to the title without potential valid legal issues with the title.

Special Warranty Deed vs. General Warranty Deed

A special warranty deed, also known as a limited warranty deed, is a variation on the general warranty deed. While the word "special" may convey to the buyer the idea that the deed is of higher quality, the special warranty deed is less comprehensive. It offers less protection due to the limited time it covers. In residential real estate, special security deeds are often used in foreclosures and forced sales of property to settle a debt.

For example, imagine a house that has had two owners before you. The first owner was a hoarder and soon the house and garden fell into disrepair. The city's code enforcement department levied fines against the landlord, which were attached to the property. The owner fell behind on the mortgage and the bank foreclosed on the mortgage, selling the house to the second owner.

To the delight of the neighborhood, the new owner spruced up the house and cleaned up the yard. After 10 years they put the house on the market and you buy it with a special warranty deed. A few years later, he decides to sell the house. However, since code compliance bonds remain against the property, they could hinder its sale. At a minimum, you will need to meet the city privilege to obtain the title.

Similarities Between General Warranty Deeds and Special Warranty Deeds

Both general and special warranty deeds identify:

• The name of the seller: the grantor
• The name of the buyer: the beneficiary
• The physical location of the property.
• The property is free of debts or liens other than those indicated in the deed
• Grantor warrants that it is the rightful owner of the property and has the legal right to transfer title
• The grantor warrants that the property is free and clear of encumbrances and that there are no outstanding claims on the property from any creditor using it as collateral.
• There is a guarantee that the title will resist any third party claim to ownership of the property.
• The grantor will do whatever is necessary to enforce the beneficiary's title to the property.