When we are going to talk about a special warranty deed, first, we need to get the idea of a deed. So, what is a deed? We can consider deeds as a legal vehicle, which moves ownership from one entity or individual to another.
There is more than one type of deed. And some of them also protect the grantee. A grantee is a person who is receiving the property. But here, we will discuss a special warranty deed and when it is generally used.
What Is A Special Warranty Deed?
A special warranty deed is a particular deed to the one and only real estate, where the property’s seller is known as the grantor. And he warrants only against those things that occurred during their ownership.
So, in other words, the grantor does not warranty against any kind of defects in clear title, which existed before their possession of the property. With commercial property, special warranty deeds are most commonly used.
Usually, single-family and other residential property transactions will use a general warranty deed. The use of general warranty deeds is insisted by many mortgage lenders. Different states have many names for a special warranty deed. And here they are.
- Grant deed.
- Limited warranty deed.
- Covenant deed.
An Example Of Special Warranty Deed
Suppose you have found the property of your dream, and that is also on a reasonable budget of yours. But the only condition is that the seller only wants to convey it by special warranty deed.
The previous owner or the person had the ownership of this property prior to the current seller who is owning the property now, for several reasons, failed to pay her or his property taxes. For tax dues against this property, the country has perfected a lien.
The current seller from whom you are going to purchase the property is not bound to disclose this to you in a special warranty deed, as he did not sustain the property taxes during her or his specific ownership.
So, when you are signing the deed, the responsibility of making the payments of those taxes becomes yours. Effectively you are taking the property “As-Is.” and the only way that you have for removing the lien is by paying the underlying debt.
What Must Be Included In A Special Warranty Deed?
In order to be legal, any kind of deed has to have the following pieces of information. And this is applicable for a special warranty deed as well.
- Name along with the address of the grantor or the person who is conveying the property.
- Name along with the address of the grantee or the person who is receiving the property.
- The legal description of the property. This could be the description of the property line or lot number. You also find it on the previous deed.
- A statement that will state that the grantor has an intention of conveying the specific property to the grantee.
- As the grantor is the legal owner of the property, he or she has the legal right to convey the property.
- Against the property, there are no claims outstanding by any creditor or anyone other. And that was established during the ownership period of the grantor.
- The grantor guarantees that the person has a clear title only during the period of ownership. If during that period, there is a problem, the grantor will not compensate the grantee. The time period before the grantor owned the property is not covered by the guarantee.
How A Special Warranty Deed Differs From Others?
A special warranty deed’s defining component is that it says there are no claims against the very title during the specific time period when the grantor owned it.
- A quitclaim deed only conveys what the grantor owns. And it does not also make any kind of promise that there are no other kinds of claims against this particular property, either during or before the ownership of the grantor.
- A general warranty deed promises that there are no title defects during any time period at all.
When Is A Special Warranty Deed Used?
When a house has been foreclosed on by a bank, a special warranty deed is common. And this happens because the previous owner failed to pay their mortgage. First, the bank forecloses the specific property. And after that, they sell it to a new buyer.
Now the special warranty deed, which is provided by the bank to the new buyer, offers no protection for the time period before the bank took ownership of the property. So, I hope it is now clear when a special warranty deed is used generally.
Special Warranty Deed And Title Insurance
Whenever a buyer purchases a property under this special warranty deed, there always stays a possibility of a prior owner or creditor making a claim against the property. So, when you are going for such property, the best way of purchasing it is buying title insurance.
And you need to purchase title insurance when you are buying the property. The title insurance company always researches the title in order to ensure that it is clear. And only after that, it will provide insurance. So, you will get protection if there were any old claims, which are brought against your title.
However, a special warranty deed always offers the buyer some guarantees about the title, but it never provides complete protection. However, all these kinds of deeds are acceptable if all the other protections are put in place.
So, it is important to know about the right forms of a special warranty deed. You can search on the internet “special warranty deed forms” or also can take help from a professional.
So, this is a special warranty deed and how it is used. So, in case you are going for a special warranty deed, you need to make sure to check all the backgrounds. Only then you will be able to avoid the extra costs that you should not expect from a property that you have just bought.
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