A warranty deed is a legal document used to transfer the ownership of real property to a new individual. Every state has its distinct warranty deed form, and there are several types of warranty deeds, each of which differs in how much protection they give the grantee.
Warranty Deed vs Title
A title proves an owner owns a property. On the other hand, a warranty deed is a document used to transfer a title from the old owner to a new owner.
Covenants of a Warranty Deed
You may hear people refer to a warranty as a “full-covenant-and-warranty-deed.” This title comes from the fact that a warranty deed can contain up to six key promises or covenants that the grantor makes to the grantee. These promises, the first three which are present and the latter three which are future, are as follows:
- Covenant of Seisin: Confirms that the grantor legally possesses the property.
- Covenant of the Right to Convey: Confirms that the grantor has the legal right to sell the property.
- Covenant Against Encumbrances: Confirms that the grantor has revealed all encumbrances (property tax liens, etc.) to the grantee.
- Covenant of Warranty: Guaranteeing that the grantor will protect the property if another party tries to claim ownership.
- Covenant of Quiet Enjoyment: Guaranteeing that the buyer will enjoy owning the property without interference from third parties.
- Covenant of Further Assurances: Guaranteeing that the seller will address any encumbrances.
Does a Warranty Deed Prove Ownership?
Not necessarily. A warranty deed is the grantor’s sworn declaration that they, as far as they know, legally own the property and intend to transfer ownership to you, the grantee. However, grantors may not be aware of claims against the title to a property even if they have signed an affidavit of title.
Without a warranty deed, you may have no recourse if you discover that the property you purchased is not free of debt or other liens (i.e., a claim someone else has on a property). It might even be the case that the grantor didn’t even have the authority to sell the property.
However, if you have a warranty deed, you have the right to remedies, primarily by suing for damages (i.e., monetary compensation).
Types of Warranty Deeds
A warranty deed is a critical part of the real estate process that transfers property ownership from the seller to the buyer. It protects the new property owner since the seller promises they have the legal right to transfer the property and that there are no undisclosed liens.
Since the seller is legally required to disclose any liens or encumbrances, the new property owner can hold the seller liable if the title has a problem. With a warranty deed, the seller provides these disclosures and warrants the property is free of liens and encumbrances.
Common encumbrances include easements, use restrictions, tax liens, or legal judgments.
Depending on the property type and legal status, you may use one of the following types of warranty deeds. Each type differs in terms of how much protection is granted to the quality or health of the property’s title.
General Warranty Deed
A general warranty deed is a legal document used to transfer ownership of real property. It guarantees that the title to the property is warranted against all possible defects (even defects a grantor isn’t responsible for causing).
Specifically, it offers more protection to the grantee by guaranteeing the entire property history, including the time before and after the grantor owned the property.
It’s typically used when a grantee pays for a property because it provides the maximum legal protection.
A general warranty deed is the standard choice for real estate transactions. It transfers ownership of real property from one person or entity to another with warranties that the property has no liens or encumbrances.
Statutory Warranty Deed
A statutory warranty deed is an abbreviated general warranty deed that relies on state law to define the guarantees it provides the buyer.
Because some states have not passed laws setting up statutory warranty deeds, they may not be available in your state.
However, the protections are the same as those in a general warranty deed.
Special Warranty Deed
A special warranty deed (or a limited warranty deed) is a legal document that guarantees against defects to a property’s title for the period when the grantor owned it. It’s typically used when the seller doesn’t want legal responsibility for claims against the title before or after the time when they owned the property. If such claims were to happen, you would have to defend your title in court.
Rather than guaranteeing that the title is fully clear of all encumbrances and liens, this deed only covers the period the current seller owned the property. It does not include any liability for encumbrances or liens before the seller acquired the property.
Important
A special warranty deed reduces a seller’s risk if title issues arise from a prior owner’s actions. However, a special warranty deed can be problematic if you are a buyer.
What to Include in Your Warranty Deed
The key elements of a warranty deed include the following:
- Grantor: List the individual(s) or corporation currently owning the property.
- Grantee: List the individual(s) or corporation who will be the new owner.
- Mailing addresses: Provide the physical addresses (not P.O. boxes) of both parties.
- Joint tenancy: Warranty deeds can transfer ownership to multiple new owners, referred to as joint tenants. Each joint tenant owns a share of the overall property and can sell or bequeath their individual share.
- Consideration: Provide the amount to be paid for the property, if any.
- Legal description: Include a legal description (you can usually find it on your property deed) to help everyone identify which property is being transferred.
- Parcel number: This number is usually listed on the property’s tax statement, but if you have trouble locating the parcel number, you can also call or visit the city, county, or court office where the property taxes are paid to get it.
- Witnesses: Some states require that witnesses watch the owner sign the deed.
- Notary: The person transferring the property must take the deed to a notary public who will verify that the signature on the deed is authentic.
