General Warranty Deeds and Special Warranty Deeds (sometimes known as a Limited Warranty Deed, and infrequently as a Trustee’s Deed or Executor’s Deed) can be used to transfer property from the seller to the buyer with certain guarantees against future problems or claims. What differentiates the two is the degree of the coverage of the warranty.
General and Special Warranty Deeds both guarantee the buyer that:
– The seller owns all the rights (the title) to the property.
– The seller has the right to sell (convey) the property.
– The property is free of all encumbrances besides those mentioned in the deed (easements, judgments, restrictive covenants, etc).
– The seller will defend the property against all claims.
Here is the big difference between the General Warranty Deed and the Special Warranty Deed.
General Warranty Deeds encompass the property’s entire history. The seller states that they don’t just own the property, but all rights in the property as well.
A Special Warranty Deed only covers the period of time for which the seller owned it, and is only responsible for debts and problems accrued or caused during his ownership of the property. They are often given by corporations, and seen in most foreclosures.
While the seller in a Warranty Deed must defend the title against all other claims and compensate the buyer for any unsettled debts or damages, the seller in a Special Warranty Deed is only responsible for debts and problems accrued or caused during his ownership of the property.
What bridges that gap for the purchaser if they are getting a Special Warranty Deed? Title Insurance.
An owner’s title insurance policy backs up the claims of both types of Warranty Deeds, protecting the buyer from any future questions about ownership or liens.
In the course of investigating Title during the process of issuing Title Insurance, the results of the search will give the buyer confidence that they will have knowledge of potential issues. Although Title Insurance does not guarantee that you will not have a title problem, it does provide peace of mind and insurance to help pay to correct the problem or to compensate you if the problem cannot be corrected.
You can download a PDF of this tip here.
My Agent Greg 