Special Warranty Deed

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 just against anything that happened during their physical ownership. All in all, the grantor guarantees against no deformities in clear title that existed before they claimed the property.

How a Special Warranty Deed Works

Special warranty deeds are generally commonly utilized with commercial property transactions. Single-family and other residential property transactions will for the most part utilize an overall warranty deed. Many mortgage lenders demand the utilization of the overall warranty deed.

Special warranty deeds go by many names in various states, including covenant deed, grant deed, and limited warranty deed. The guarantee covers just the period when the seller held title to the property with a special warranty deed. Special warranty deeds don't safeguard against botches in a free-and-clear title that might exist before the seller's ownership.

Subsequently, the grantor of a special warranty deed is just at risk for debts, issues, or different encumbrances to the title that they caused during their property ownership. The grantee takes care of any issues that emerge from the previous owners.

General Warranty Deed

A warranty deed gives the transfer of ownership or title to commercial or residential real estate property and accompanies specific guarantees made by the seller. These guarantees incorporate that the property title is being transferred free-and-clear of ownership claims, outstanding liens or mortgages, or other encumbrances by people or elements other than the seller.

A general warranty deed covers the property's whole history and guarantees that the property is free and clear from deformities or encumbrances, whether they occurred or under whose ownership. The overall warranty deed guarantees the buyer they are getting full ownership rights without substantial likely legal issues with the title.

The overall warranty deed is the most common and preferred type of instrument used to transfer real estate titles in the United States.

Special Warranty Deed versus General Warranty Deed

A special warranty deed — otherwise called a limited warranty deed — is a variation of the overall warranty deed. While "special" may convey to a buyer that the deed is of higher quality, the special warranty deed is less far reaching. It offers less protection due to the limited time span it covers. In residential property, special warranty deeds are much of the time utilized in foreclosures and the forced sale of the property to fulfill a debt.

For instance, envision a home that has had two previous owners before you. The primary owner was a hoarder, and soon the house and yard fell into deterioration. The city's code enforcement department issued fines against the owner, which were connected to the property. The owner fell behind on their mortgage, and the bank abandoned, selling the home to the subsequent owner.

To the delight of the area, the new owner fixed the house and cleaned the yard. Following 10 years, they put the home on the market, and you buy it utilizing a special warranty deed. A couple of years after the fact, you choose to sell the house. Nonetheless, in light of the fact that the code enforcement liens stay against the property, they could hinder your sale. At any rate, you should fulfill the city's lien to free the title.

Likenesses Between General Warranty Deeds and Special Warranty Deeds

Both the general and special warranty deeds recognize:

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 prominent 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 get free from all liens and that there are no outstanding claims on the property from any creditor involving it as insurance
There is a guarantee that the title would endure any third-party claims to ownership of the property.
The grantor will do whatever is important to make great 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

## Illustration of Special Warranty Deed

Albeit general warranty deeds are more normal in residential real estate transactions, there is one area where the special warranty deed turns into the standard. This one arena is for dispossessed properties, real-estate-owned (REO), or short-sold properties.

Most Federal National Mortgage Association (FNMA), Housing and Urban Development (HUD), and bank-owned homes sell utilizing this kind of deed. Maybe one primary justification for the utilization of special warranty deeds is on the grounds that the selling authority has no wish to be at risk for any situation concerning the property before the seizure.

For instance, 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 dispossessed upon by their lender, Wells Fargo Bank. Subsequent legal records indicated that Wells Fargo "passed the Property on 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 survey of accessible public records to decide the ownership of property. Lawyers, title companies, and people can complete title searches to confirm ownership of property. While these pursuits are broad, there is generally the possibility that something will be remembered fondly.

Consequently, most buyers — no matter what the type of warranty deed they use — likewise purchase title insurance while buying a property. Title insurance is an indemnity insurance policy that safeguards a buyer from financial claims against the title of a property they own.

Features

The primary difference between a special warranty and an overall warranty deed is the manner by which they deal with the time span of protection given to title ownership.
Both general warranty deeds and special warranty deeds give similar general protections to the buyer.
A special warranty deed guarantees two things: The grantor possesses, and can sell, the property; and the property incurred no encumbrances during his ownership.
A special warranty deed is a deed where the seller of a piece of property just warrants against issues or encumbrances in the property title that happened during his ownership.
A special warranty deed is more limited than the more normal general warranty deed, which covers the whole history of the property.

FAQ

What Are Other Names for a Special Warranty Deed?

Covenant deed, grant deed, and limited warranty deed are various names for "special warranty deed" utilized by the real estate industry.

What Is a Special Warranty Deed Used For?

In the event that you are engaged with a commercial property transaction, you will doubtlessly have to utilize a special warranty deed.

What Is a General Warranty Deed?

In the event that you are purchasing a home or other type of residential property, you will as a rule utilize an overall warranty deed for your transaction with your mortgage lender.