What Is a Special Warranty Deed?
A special warranty deed is a deed to real estate where the seller of the property—known as the grantor—warrants only against anything that occurred during their physical ownership. In other words, the grantor doesn't guarantee against any defects in clear title that existed before they took possession of the property.
Key Takeaways
- A special warranty deed is a deed in which the seller of a piece of property only warrants against problems or encumbrances in the property title that occurred during his ownership.
- 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.
- Both general warranty deeds and special warranty deeds provide the same general protections for the buyer.
- 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.
How a Special Warranty Deed Works
Special warranty deeds are most commonly used with commercial property transactions. Single-family and other residential property transactions will usually use a general warranty deed. Many mortgage lenders insist upon 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 when the seller held title to the property with a special warranty deed.Special warranty deeds do not protect against mistakes in a free-and-clear title that may exist before the seller's ownership.
Thus, the grantor of a special warranty deed is only liable for debts, problems, or other encumbrances to the title that they causedduring their property ownership. The grantee assumes responsibility for any issues that arise from the previous owners.
General Warranty Deed
A warranty deed provides the transfer of ownership or title tocommercial or residentialreal estate property and comes withcertain guarantees made by the seller. These guarantees include that the property title is being transferred free-and-clear of ownership claims, outstanding liens or mortgages, or other encumbrances by individuals or entities other than the seller.
A general warranty deed covers the property's entire history and guarantees that the property is free and clear from defects or encumbrances, whether they happened or under whose ownership. The general warranty deed assures the buyer they are obtaining full ownership rights without valid potential legal issues with the title.
The general warranty deed is the most common and preferred type of instrument used to transfer real estate titles in the United States.
Special Warranty Deed vs. General Warranty Deed
A special warranty deed—also known as a limited warranty deed—is a variation of the general warranty deed. While the word "special" may communicate to a 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 timeframe it covers. In residential property, special warranty deeds are frequently used in foreclosures and the forced sale of the property to satisfy a debt.
As an example, imagine a home that has had two previous owners before you. The first owner was a hoarder, and soon the house and yard fell into disrepair. The city's code enforcement department issued fines against the owner, which were attached to the property. The owner fell behind on their mortgage, and the bank foreclosed, selling the home to the second owner.
To the pleasure of the neighborhood, the new owner fixed the house and cleaned the yard. 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 house. However, because the code enforcement liens remain against the property, they could encumber your sale. At the very least, you will need to satisfy the city's lien to free the title.
Similarities Between General Warranty Deeds and Special Warranty Deeds
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 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
- There is a guarantee that the title would withstand any third-party claims to ownershipof the property.
- The grantor will do whatever is necessary to make good the grantee’s title to the property
Pros
Special warranties allow the transfer of property title between seller and buyer.
The purchase of title insurance can mitigate the risk of prior claims to the special warranty deed.
It is useful for buying a house in foreclosure.
Cons
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.
Special warranty deeds are not often used for residential properties
Example of Special Warranty Deed
Although general warranty deeds are more common in residential real estate transactions, there is one area where the special warranty deed becomes the norm. This one arena is for foreclosed properties, real-estate-owned (REO), or short-sold properties.
Most Federal National Mortgage Association (FNMA), Housing and Urban Development (HUD), and bank-owned residences sell using this sort of deed. 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. In February 2013, the property was foreclosed upon by their lender, Wells Fargo Bank. Subsequent legal documents indicated that Wells Fargo "conveyed the Property to FNMA in a special warranty deed."
Special Considerations
Most times, a title search will uncover any liens or claims to the title of a property. A title search is a review of available public records to determine the ownership of property. Attorneys, title companies, and individuals can complete title searches to verify ownership of property. While these searches are extensive, there is always the possibility that something will be missed.
For this reason, most buyers—regardless of the type of warranty deed they use—also purchase title insurance when buying a property. Title insurance is an indemnity insurance policy that protects a buyer from financial claims against the title of a property they own.
What Is a Special Warranty Deed Used For?
If you are involved in a commercial property transaction, you will most likely need to use a special warranty deed.
What Is a General Warranty Deed?
If you are purchasing a home or other type of residential property, you will usually use a general warranty deed for your transaction with your mortgage lender.
What Are Other Names for a Special Warranty Deed?
Covenant deed, grant deed, and limited warranty deed are all different names for "special warranty deed" used by the real estate industry.
FAQs
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 are the disadvantages of a special warranty deed? ›
A special warranty deed guarantees that the buyer won't face any legal action or title issues as a result of the actions of the property's previous owner. A downfall is that this type of deed does not offer any guarantees that prior owners owned the property free and clear.
What is the difference between a special warranty deed and a general warranty deed in Texas? ›
To summarize, a Special Warranty Deed states that there were no claims against the property title during the time when the seller or grantor owned it. On the other hand, a General Warranty Deed states that there were no title defects at any point in time.
How does a special warranty deed differ from a general warranty deed quizlet? ›
Explanation: With a general warranty deed the grantor warrants against title defects that arose either before or during the grantor's period of ownership. On the other hand, the covenants in a special warranty deed protect against title defects that occurred only during the grantor's period of ownership.
Why would you use a special warranty deed in Texas? ›
Special warranty deeds can be used in any situation where the person signing the deed is willing to provide a warranty of title that covers his or her own actions, but cannot or will not make any guarantees about previous owners.
What is the safest type of deed? ›
Warranty deeds are the safer option when buying property versus simply transferring ownership.
What is the most common type of warranty deed? ›
General 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.
What 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.
Who benefits the most from a warranty deed? ›
Who Benefits the Most from Recording a Warranty Deed? The 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.
Who is the grantor on a special warranty deed in Texas? ›
In real estate, a special warranty deed is a legal document where the seller of a property, also known as the grantor, warrants only against anything that happened during their physical ownership of a property.
A special warranty deed differs from a general warranty deed in that where a general warranty deed guarantees title against interests predating the grantor's ownership of the property, a special warranty deed merely guarantees title only against defects arising during the time the grantor owned the real property.
What type of deed conveys the most rights? ›
General warranty deeds give the grantee the most protection, special warranty deeds give the grantee more limited protection, and a quitclaim deed gives the grantee the least protection under the law.
Which statement 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 is the granting clause in a special warranty deed? ›
Granting Clause:
The clause in the deed that lists the grantor and the grantee and states that the property is being transferred between the parties.
Which of these guarantees is offered by a general warranty deed but not a special warranty deed? ›
Which of these guarantees is offered by a general warranty deed but not a special warranty deed? The property is free of debt or other claims taken on by the grantor during the ownership period.
What is a special warranty deed used for in Florida? ›
In Florida, a special warranty deed transfers title in fee simple to the grantee with warranties and covenants of title that are limited to only the acts of the grantor or that result from the acts of the grantor. A special warranty deed is a form of deed customarily used in commercial real property transactions.
Which deed grants the most protection? ›
General warranty deed.
In essence, the grantor is saying, “I promise there are absolutely no undisclosed title problems, and I will pay to defend the title in court." A general warranty deed gives the grantee the most possible protection.
What is the weakest form of deed? ›
The Quitclaim Deed
A quitclaim deed provides the least protection for the buyer, and its uses are very limited. This type of deed simply transfers any interest the grantor might have in the property. It doesn't guarantee that the grantor has any interest to convey.
What is the strongest form of deed? ›
What Is the Strongest Type of Deed? For real estate buyers, a general warranty deed provides greater protection than any other type of deed. While it's the best deed for the grantee, it gives the grantor the most liability.
What type of deed best protects a buyer and why? ›
A general warranty deed is the most common type of warranty deed in the United States. 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.
Warranty deed
A warranty deed, which also may be called a general warranty deed, is the type of deed used most frequently when real property is sold. A warranty deed guarantees that the title is free and clear of debts or liens.
Which type of deed is sometimes called a general 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.
Is the general warranty deed the most commonly used deed and has the most comprehensive protections? ›
The general warranty deed is the most commonly used deed and has the most comprehensive protections. A real estate licensee must have the knowledge to provide an opinion of title. Easem*nts are a form of government restrictions on property. The deed must be notarized for property transfer to legally occur.
What type of deed offers the most complete warranties about the quality of the property and is the most attractive deed from the purchaser's perspective? ›
A warranty deed provides guarantees of clear title to real property and that the current owner has the legal right to sell it or transfer it to another party. A quitclaim deed, in contrast, contains no guarantees about the quality of the title or owner.
Which type of deed would be the best to convey property from the standpoint of the grantor? ›
A quitclaim deed contains no warrants of any kind. The grantor states that any interest they may have in the property is relinquished to the grantee. This is the best type of deed from the standpoint of the grantor.
How does a warranty deed compare to a quitclaim deed? ›
A warranty deed makes a promise to the buyer that the seller has good title to the property. A quitclaim deed, on the other hand, makes no promises. A quitclaim deed just says; whatever interest I have in this property, I give to you.
Which type of deed makes no assurances regarding the marketability of title? ›
A quitclaim deed makes no assurance that the grantor actually has an ownership interest in a property; it merely states that if the grantor does, they release those ownership rights. Quitclaim deeds are typically used to transfer property in non-sale situations, such as transfers of property between family members.
What limits are set by the covenants in a general warranty deed? ›
What limits are set by the covenants in a general warranty deed? No limits are set.
When the grantor offers the grantee a general warranty deed? ›
As one of the most secure types of deeds, general warranty deeds are used in most real estate title transfers. General warranty deeds provide guarantees that the grantor has the right to sell the property and that the grantee will be receiving a title that is free of debt, claims, or other legal encumbrances.
What is a special warranty deed state of Texas? ›
The Special Warranty Deed is a very common type of deed used in commercial transactions. While it provides protection for the Grantee for claims arising through the Grantors ownership, it does not protect the Grantee from defects in title occurring prior to the ownership of the Grantor.
In Texas, a deed must be in writing and signed by the person transferring the land. We call this the “grantor.” The person the grantor transfers the land to is the “grantee.” You do not have to use particular words to constitute a legally effective transfer.
What is the difference between a grantor and a grantee? ›
What Are Grantors And Grantees? There are two sides to a transaction. In real estate, a grantee is the recipient of the property, and the grantor is a person that transfers ownership rights of a property to another person. However, the specifics of their transaction may vary depending on the situation.
Is a limited warranty deed the same as a special warranty deed in Georgia? ›
In Georgia, a limited warranty deed (also known as a special warranty deed) transfers title in fee simple to the grantee with warranties and covenants of title that are limited only to acts arising by, through, or under the grantor.
What is a third party holds title to property on behalf of someone else through the use of a? ›
A deed of trust has a borrower, lender and a “trustee.” The trustee is a neutral third party that holds the title to a property until the loan is completely paid off by the borrower.
What type of deed is best for the seller? ›
A general warranty deed is the most common type of deed used for transferring real estate. It basically promises that: not only does the seller have good and proper title to sell the property, but all the prior owners also had good title, thus making a complete “chain of ownership”; and.
Which deed provides the least protection? ›
If the seller offers this type of deed, buyers should understand that a quitclaim offers them the least protection of any deed type. Special Warranty Deed It does not provide as much protection for the buyer as does the general warranty deed. The grantor provides fewer warranties.
What is the strongest title protection? ›
A warranty deed offers the strongest protection. It protects the party receiving the property title in case there turns out to be any issues with the title. In a worst-case scenario, the buyer can sue the seller if they find out that the property had any liens or claims against it.
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.
Which type of deed contains no warranties at all? ›
Non-Warranty Deeds
In a Non‑Warranty or Quitclaim Deed, the seller merely is giving the buyer whatever rights, if any, that the seller has in the property and the seller makes no warranties of any nature about the seller's rights in the property.
What is the difference between a special warranty deed and a general warranty deed in Florida? ›
Another type of deed is the Florida special warranty deed. Unlike the general warranty deed, the special warranty deed Florida provides only has a limited warranty of title against third-party claimants. The legal protections include: The seller holds legal title to the property.
General Warranty Deed:
The General Warranty Deed contains promises from the seller to the buyer stating that they have good title and will defend against any possible defects that may arise. In addition, the General Warranty Deed contains six specific covenants that protect the purchaser.
What deed warranty guarantees that the seller is the actual owner of the property being conveyed? ›
The grantor warrants that they are the rightful owner of the property and have the legal right to transfer the title of the property in a sale. The grantor warrants that the property is free and clear of all liens and that there are no outstanding claims on the property from a creditor who may claim it as collateral.
What are the covenants of a general warranty deed in Florida? ›
General Warranty Deed
Covenant of Seisin- the promise that the seller owns the property being sold. Covenant of the Right to Convey- the promise that the seller has the right to convey the property. Covenant Against Encumbrances- the promise that the property is free of any liens or encumbrances.
What does a special warranty deed protect the grantee against? ›
What Is a Special Warranty Deed? A special warranty deed is a deed to real estate where the seller of the property—known as the grantor—warrants only against anything that occurred during their physical ownership.
Which deed contains the strongest warranty? ›
General Warranty Deeds: A general warranty deed provides the most protection to the buyer but gives the grantor the highest degree of liability. The grantor of a general warranty deed fully warrants good clear title to the property. This type of deed is used in most real estate deed transfers.
Which of the following describes a special warranty deed? ›
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.
Which deed provides the highest degree of title protection? ›
A general warranty deed is the gold standard of property transfers. This type of deed is overwhelmingly used in residential purchases. Most lenders require a warranty deed for properties they finance. It offers buyers the greatest possible protection from future claims against the title.
What type of deed provides the grantee with the least protection? ›
The 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.
Which deed provides the greatest amount of protection for the grantee? ›
A general warranty deed is used to transfer real property from one person to another. This type of deed offers the greatest protection for the buyer and has specific requirements for what must be included in the document.
What is the best deed to have? ›
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.
Quitclaim Deeds
This is because a quitclaim deed offers the lowest level of protection.
Which deed has only two implied warranties of title? ›
The typical grant deed only makes two warranties: that the grantor has not transferred the property to anyone else and that there are no title problems that arose during the time the grantor has held title.
