A special warranty deed is a legal document that transfers ownership of real property from one person to another. This particular type of deed guarantees that there are no defects or problems with the title during the seller's ownership period, but makes no promises about the condition of the title before the seller owned the property.
What must be included in a special warranty deed
Any type of deed has to contain the following information to be legal:
- Name and address of the person conveying the property, also known as the grantor
- Name and address of the person receiving the property, also known as the grantee
- Legal description of the property (which could be a description of property lines or a lot number), which you can find on the previous deed
- Statement that the grantor intends to convey the property to the grantee
To qualify as a special warranty deed, it must also say that:
- The grantor is the legal owner of the property and has the legal right to transfer the property.
- There are no outstanding claims against the property by any creditor or anyone else that were instituted during the grantor's ownership period.
- The grantor guarantees he or she has clear title only during his or her period of ownership and, if there is a problem with title during that period, the grantee is not entitled to compensation from the grantor. The guarantee does not cover the time period before the grantor owned the property.
Here's an example. If Joaquin has owned his home since June 11, 2011, and transfers it to Mae with a special warranty deed, he is promising that from June 11, 2011, until the date of sale, there are no claims against the title. He makes no promises about the time period before that date, though, so Mae is buying or accepting the property knowing that if there are claims against the title before June 11, 2011, Joaquin is not responsible for them and Mae will have to handle them on her own.
How a special warranty deed differs from other deeds
The defining component of a special warranty deed is that it states there are no claims against the title during the time period when the grantor owned it. By comparison:
- A quitclaim deed conveys only what the grantor owns and makes no promises that there are no other claims against the property, either during or before the grantor's ownership.
- A general warranty deed promises there are no title defects at all, during any time period.
When a special warranty deed is used
A special warranty deed is common when a house has been foreclosed on by a bank because the previous owner did not pay their mortgage. The bank forecloses on the property and then sells it to a new buyer. The special warranty deed that the bank provides to the new buyer provides no protection for the period of time before the bank took ownership of the property.
Special warranty deed and title insurance
When a buyer purchases property under a special warranty deed, there is the possibility that a prior creditor or owner could make a claim against the property. The best way to protect yourself as a buyer is to buy title insurance when you purchase the property. The title insurance company will research the title to ensure it is clear and then provide insurance so that you have protection should there ever be an old claim that is brought against your title.
A special warranty deed provides the buyer with some guarantees about title, but it does not offer complete protection. However, these types of deeds can be acceptable if other protections are put in place.
You can find the right form to use by searching online for "special warranty deed" and your state's name. If you want help in creating a special warranty deed or any other type of deed, you can use an online services provider to help ensure that everything is completed and filed properly.
