Special warranty deed

Definition

A special warranty deed is a type of legal document that conveys property from one party to another, providing limited guarantees regarding the title. It assures the buyer that the seller has not caused any defects in the title during their ownership but does not cover issues arising before the seller took possession. This type of deed is commonly used in real estate transactions and provides a moderate level of protection to the buyer.

5 Must Know Facts For Your Next Test

1. In a special warranty deed, the seller only warrants against claims that arose during their ownership period, not before.
2. This type of deed is often preferred in commercial real estate transactions, where parties want to limit liability for previous issues with the property.
3. Special warranty deeds may also be used in foreclosure sales or by government entities, reflecting a desire to provide limited liability.
4. The language used in a special warranty deed can vary, but it typically includes phrases like 'grant' and 'convey' along with specific warranties.
5. Buyers should carefully review special warranty deeds and consider obtaining title insurance for additional protection against potential undisclosed issues.

Review Questions

• What are the key differences between a special warranty deed and a general warranty deed?
  • The main difference lies in the extent of protection offered to the buyer. A special warranty deed only covers claims that arose during the seller's ownership, while a general warranty deed guarantees protection against any defects in title, regardless of when they originated. This makes general warranty deeds more comprehensive and favorable for buyers who want maximum security regarding their property investment.
• In what scenarios might a seller choose to use a special warranty deed instead of a quitclaim or general warranty deed?
  • Sellers may prefer using a special warranty deed when they want to limit their liability for any issues that existed prior to their ownership while still offering some assurance to the buyer. This is common in commercial real estate transactions, where properties may have complex histories. Special warranty deeds are also often used in foreclosure sales or by government entities where there is less emphasis on guaranteeing the title beyond the seller's period of ownership.
• Evaluate how using a special warranty deed impacts both buyers and sellers in real estate transactions.
  • Using a special warranty deed impacts buyers by providing them with limited assurances about the title, potentially leaving them vulnerable to claims from before the seller's ownership. For sellers, it allows them to limit their liability for past defects, which can be beneficial if they are unsure about the property's history. Overall, while buyers gain some level of protection under this deed type, they should consider obtaining title insurance as an extra safeguard against undisclosed issues.

Related terms

general warranty deed: A general warranty deed offers the highest level of protection to the buyer, guaranteeing that the title is clear from any defects, regardless of when they arose.

quitclaim deed: A quitclaim deed transfers whatever interest the grantor has in the property without making any warranties about the title, offering no protection to the grantee.

title insurance: Title insurance protects buyers and lenders against losses due to defects in a property's title that were not discovered during the title search process.