What Is a Warranty Deed—Top Things You Should Know

Buying a home entails a great deal of responsibility because it is typically the most significant investment you will make in your lifetime. The idea of closing on one's dream home and then having a bank question the legal right to the property is unsettling. This is where a warranty deed becomes crucial.

Although it may appear to be just another document among the mortgage paperwork, it is a vital agreement that safeguards the home from any future claims. Keep reading to learn more about a warranty deed and its primary use.

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What Is a Warranty Deed?

A warranty deed is a legal document used to transfer property ownership from one particular person or entity to another. It is one of the most important documents in real estate transactions as it guarantees the buyer’s ownership rights and offers protection against any claims or defects in the property title. The warranty deed is a legally binding agreement with certain warranties and guarantees from the buyer to the seller.

The person selling the property, also known as the grantor, is responsible for providing a warranty to the buyer, or the grantee, that they have clear title to the property. This means that the grantor is the rightful owner of the property and has the legal right to transfer it to the grantee. The grantor also guarantees that no encumbrances, liens, or other problems hinder the buyer’s property ownership.

By providing these warranties and guarantees, the grantor offers the grantee protection against any potential property claims from previous owners or other parties. If any issues arise with the property title, the grantee has legal recourse to seek resolution from the grantor.

How Does a Warranty Deed Work?

A deed is a legal document used to transfer real estate property ownership from a seller to a buyer. In a real estate transaction, a title company thoroughly searches the property's current and past ownership to identify any defects or issues that may impact the title.

A warranty deed provides a layer of protection to the buyer by holding the seller or grantor accountable for any breaches discovered after the title search, even if they were unaware of the issue or if it occurred before they owned the property. This ensures the buyer will not be responsible for any previous title defects or encumbrances.

During the sale closing, the warranty deed is presented to the grantee. It includes a precise legal description of the transferred property, is signed and witnessed in compliance with state laws, legal language transferring ownership from the seller to the buyer, and provides evidence of the amount of money or consideration exchanged for the property.

Components of a Warranty Deed

A warranty deed typically includes several key components. These may include:

Grantor and Grantee Information: The deed will include the names and addresses of both the grantor and grantee.
Property Description: The deed should include a detailed description of the transferred property, its legal description, and any other identifying information.
Warranties and Guarantees: The deed should contain specific language that outlines the warranties and guarantees being made by the grantor to the grantee. These may include guarantees that the grantor has clear title to the property, that there are no liens or encumbrances on the property, and that the grantee's ownership rights will not be challenged by any third parties.
Signatures: The deed must be signed by both the grantor and grantee in the presence of a notary public or other authorized official.

Types of Warranty Deeds

Different types of warranty deeds can be used in real estate transactions. The type of warranty deed used may vary based on the specific needs and circumstances of the parties involved in the transaction. Here are some of the most common types of warranty deeds.

1. General Warranty Deed

A general warranty deed offers the highest level of security to the grantee. It includes the broadest set of warranties and guarantees from the grantor. The grantor guarantees that they have clear title to the property and that there are no liens, encumbrances, or other defects that would affect the grantee's ownership rights.

2. Special Warranty Deed

A special warranty deed, also known as a limited warranty deed, provides a more limited set of warranties and guarantees from the grantor. The grantor only guarantees they have not created any defects or encumbrances during their property ownership. This deed does not protect the grantee against defects that may have existed before the grantor's ownership.

3. Quitclaim Deed

A quitclaim deed provides the least amount of protection to the grantee. It does not include any warranties or guarantees from the grantor. Instead, it simply transfers the grantor's ownership interest in the property to the grantee. This deed is often used when the grantor is unsure about the extent of their ownership interest in the property.

4. Special Purpose Deed

A special purpose deed is a type of warranty deed that is used for a specific purpose or transaction. Examples of special purpose deeds include a deed instead of foreclosure, which is used when a borrower wants to avoid foreclosure by transferring ownership of the property to the lender, and a gift deed, which is used to transfer ownership of the property as a gift.

How Do You Get a Warranty Deed?

A warranty deed is typically prepared by a real estate attorney or a title company, and it is usually obtained as part of the closing process when a property is sold or transferred. Here are the general steps to follow to get a warranty deed:

Hire a real estate attorney: If you are involved in a real estate transaction, it is recommended that you hire a real estate attorney to assist you with the legal aspects of the transaction. Your attorney can help you prepare the necessary documents, including the warranty deed, to ensure that the transfer of ownership is legally valid and that your rights are protected.

Obtain a title search: Before a warranty deed can be prepared, a title search should be conducted to ensure that the transferred property has a clear title. A title search will identify any liens, encumbrances, or other issues that may affect the transfer of ownership.

Draft the warranty deed: Once the title search is complete, the real estate attorney or title company will prepare the warranty deed. The deed will include the necessary information, such as the names of the grantor and grantee, a legal description of the property, and the warranties provided by the grantor.

Review and sign the deed: The grantor and grantee must review the warranty deed carefully before signing it. Once both parties have reviewed and agreed to the terms of the warranty deed, they will sign it in the presence of a notary public or other authorized official.

Record the deed: After the warranty deed has been signed and notarized, it must be recorded with the county clerk or other appropriate government agency. This recording process creates a public record of the transfer of ownership and protects the grantee's rights to the property.

Should You Get a Warranty Deed?

It's crucial to obtain a warranty deed when purchasing a home. A seller motivated to make a deal will likely be willing to provide one as long as you meet their reasonable demands and qualifications. This is because the seller should understand that you want to protect yourself as much as possible, and they should have no issue with recording a warranty deed if they have nothing to hide.

However, if a seller seems hesitant to provide a warranty deed, it's essential to investigate their reasons for doing so. After all, buying a property is typically the biggest investment you'll make in your life. If you wouldn't hesitate to obtain warranties for everyday items like a vacuum or a laptop, it's only reasonable to want a warranty for your home.

Final Thoughts on Warranty Deeds

We hope you now clearly understand what a warranty deed is. Remember that a warranty deed provides the greatest protection to both the buyer and seller in a real estate transaction. It ensures that the property is free and clear of any liens or claims and holds the seller responsible for any potential defects or encumbrances that may arise after the sale. As a buyer, requesting a warranty deed to protect your investment and give you peace of mind is important. As a seller, providing a warranty deed can increase the value of your property and make it more attractive to potential buyers.