Warranty Deed vs. Special Warranty Deed: Which Title to Choose?

When buying or selling real estate, understanding the type of property title you hold is crucial for protecting your interests and ensuring a smooth transaction. Two common types of deeds are warranty deeds and special warranty deeds, each offering different levels of protection and implications for the parties involved.

What is a Warranty Deed?

A warranty deed is the strongest form of property title, providing the most comprehensive guarantees against any potential title defects. Under a warranty deed, the seller (grantor) warrants that:

• They have the legal right to sell the property
• The property is free from any liens, encumbrances, or easements (unless specifically stated in the deed)
• The buyer (grantee) will have peaceful possession of the property without any interference from the seller or any third party
• The seller will defend the buyer's title against any future claims or disputes

Benefits of a Warranty Deed:

• Provides the highest level of protection for the buyer
• Ensures the property's title is clear and free from defects
• Offers peace of mind for the buyer, knowing they have a strong and defendable title

What is a Special Warranty Deed?

A special warranty deed is a less comprehensive title than a warranty deed and offers limited protection to the buyer. Under a special warranty deed, the seller only warrants that:

• They have the legal right to sell the property at the time of transfer
• They have not created any liens or encumbrances on the property during their ownership

Benefits of a Special Warranty Deed:

• Less expensive than a warranty deed
• Can be used when the seller has no knowledge of any potential title defects
• Offers some protection to the buyer, albeit less than a warranty deed

Differences Between Warranty Deeds and Special Warranty Deeds

Choosing the Right Deed Type

The choice between a warranty deed and a special warranty deed depends on several factors:

• The property's history: If the property has a clear title without any known defects, a special warranty deed may suffice.
• The seller's knowledge: If the seller acquired the property through a warranty deed and has no knowledge of any potential title issues, a special warranty deed may be appropriate.
• The buyer's risk tolerance: A warranty deed offers more protection but comes at a higher cost. A buyer with a higher risk tolerance may opt for a special warranty deed to save money.

Other Tips When Choosing a Deed Type:

• Always have the property's title searched by a qualified attorney before making a decision.
• Get a title insurance policy to further protect your interests.
• Consult with a real estate professional to discuss the best title option for your specific situation.

Conclusion

Understanding the differences between warranty deeds and special warranty deeds is essential for making informed decisions when buying or selling real estate. The best choice of deed type depends on the property's history, the seller's knowledge, and the buyer's risk tolerance. By carefully considering these factors and seeking professional advice, individuals can select the appropriate title to protect their interests and ensure a secure and successful real estate transaction.