Are you in the process of buying or selling real estate? Have you encountered the term special warranty deed before and need clarification on what it means or how it impacts your transaction? If so, we've got all the answers for you here!

A special warranty deed is a legal document utilized during real estate transactions that makes certain guarantees concerning the title.

In this blog post, we will discuss what exactly a special warranty deed is, why they are used in real estate transactions, and any other pertinent information surrounding them. Keep reading to learn more about this important legal document today!

What Is a Special Warranty Deed

A special warranty deed is a legal document used in real estate transactions to transfer property ownership from one party to another. It provides certain assurances or warranties to the buyer, known as covenants, regarding the property's title.

What Is Included in a Special Warranty Deed

Heading

The document is titled "Special Warranty Deed" to indicate its nature and purpose.

Grantor and Grantee Information

The deed identifies the parties involved in the transaction, including the legal names and addresses of the grantor (seller) and grantee (buyer).

Property Description

A detailed and accurate legal description of the property being transferred is included. This description may reference information such as lot numbers, boundary lines, metes, and bounds, or any other acceptable means of property identification.

Consideration

The deed states the consideration or payment exchanged for the property, typically the purchase price.

Granting Clause

This is a crucial provision where the grantor explicitly conveys, grants, and transfers the property to the grantee. The granting clause is the operative language that effectuates the transfer of ownership.

Warranties and Covenants

Special warranty deeds contain specific warranties and covenants made by the grantor. These warranties typically include the following:

Warranty of Title

The grantor warrants that they have received title to the property and have the right to sell it.

Exceptions and Limitations

The special warranty deed may contain any exceptions, reservations, or limitations the grantor wants to specify. These could include specific encumbrances or defects that the grantor is not warranting.

Signatures and Notarization

The grantor must sign the special warranty deed in the presence of a notary public. The notary will verify the grantor's identity and acknowledge their signature.

Delivery and Acceptance

The grantor delivers the executed special warranty deed to the grantee, and the grantee accepts it, signifying their agreement to the terms of the deed.

Recording Information

The special warranty deed may include a section for recording information, such as the recording office's name, date, and document number. This information is helpful when the deed is submitted for recording with the appropriate government office.

When is a Special Warranty Deed Used

A Special Warranty Deed is typically used when the seller (grantor) wants to limit their liability and only warrants against certain claims or defects that occurred during their ownership of the property.

This type of deed is commonly used in commercial real estate transactions, where the seller may know differently about the property's history than a residential homeowner would. It is also frequently used when the property is sold through foreclosure or in bank-owned property transactions.

Special Warranty Deed vs. General Warranty Deed

Special Warranty Deed:

• Limited Warranty: A Special Warranty Deed provides a limited warranty from the seller (grantor) to the buyer (grantee).
• Specific Claims: The grantor warrants against certain claims or defects that occurred only during their property ownership.
• Limited Liability: The grantor's liability is limited to their period of ownership and does not extend to previous owners.
• Commercial Transactions: Special Warranty Deeds are commonly used in commercial real estate transactions or when the seller may have limited knowledge of the property's history.
• Foreclosure and Bank-Owned Properties: They are frequently used in foreclosure or bank-owned property transactions.

General Warranty Deed:

• Broad Warranty: A General Warranty Deed provides the buyer with the broadest form of warranty and protection.
• Full Liability: The grantor warrants against all claims or defects throughout the property's history, including those that occurred before the grantor acquired the property.
• Residential Transactions: General Warranty Deeds are typically used in residential real estate transactions where the seller is a homeowner.
• Maximum Protection: The buyer is assured of clear title and protection against potential claims or defects.
• Future Ownership: The grantor's warranties extend to all future property owners.

Similarities Between General Warranty Deeds and Special Warranty Deeds

• Both are types of real estate deeds used to transfer property ownership.
• They are legal documents that provide the buyer with a warranty or guarantee.
• Both deeds require the grantor's legal capacity and authority to transfer the property.
• They typically include a legal description of the property being transferred.
• Both deeds need to be properly executed and recorded to be legally effective.
• They establish a contractual relationship between the grantor and the grantee.
• Both types of deeds may require the payment of any applicable transfer taxes or fees.
• They are subject to local laws and regulations governing property transfers.

How a Special Warranty Deed Works

Here's how a special warranty deed typically works:

Agreement

The buyer and seller negotiate the terms of the real estate transaction, including the purchase price, closing date, and any other relevant conditions. Once the parties reach an agreement, they execute a special warranty deed.

Preparation of Deed

The special warranty deed is prepared, often with the assistance of a real estate attorney or a title company. The deed includes details such as the names and addresses of the grantor and grantee, a legal description of the property, and the warranties or covenants provided by the grantor.

Grantor's Warranties

In a special warranty deed, the grantor provides specific warranties or guarantees to the grantee. These warranties typically include the following:

• Warranty of Title: The grantor warrants that they have received title to the property and have the right to sell it.
• Covenant Against Encumbrances: The grantor assures that they have not done anything to harm or encumber the title during their ownership, except for any limitations explicitly stated in the deed.
• Limited Timeframe: The warranties of a special warranty deed are typically limited to the grantor's period of ownership and do not cover any previous ownership.

Transfer of Ownership

The grantor signs the special warranty deed, which is then delivered to the grantee. The grantee becomes the legal owner of the property upon receiving the executed deed.

Recording the Deed

To provide public notice of the change in ownership and establish the priority of the grantee's claim, the special warranty deed is usually recorded with the appropriate government office, such as the county recorder's office. This step helps protect the grantee's interests and ensures a clear property title chain.

Pros and Cons of Special Warranty Deeds

Pros:

• Limited liability for the seller.
• It can be quicker and less costly to obtain compared to a General Warranty Deed.
• Commonly used in commercial transactions or properties with complex ownership histories.
• Protects the buyer against defects that occur during the seller's ownership.

Cons:

• Limited warranty coverage, as it only covers claims or defects that occurred during the seller's ownership.
• Provide less protection to the buyer than a General Warranty Deed.
• Buyers may assume more risk regarding potential title issues or claims from previous owners.
• The buyer may require additional due diligence to ensure the property's history and title are clear.

FAQs

What is the safest type of deed?

The safest type of deed is a General Warranty Deed, which provides the buyer with maximum protection against potential title issues or claims from previous owners.

What are other names for a special warranty deed?

Other names for a special warranty deed include a limited warranty deed, a specific warranty deed, and a covenant warranty deed.

What is the main disadvantage of a special warranty deed?

The main disadvantage of a special warranty deed is that it only covers claims or defects that occurred during the seller's ownership.

Conclusion

Special warranty deeds are a great tool for real estate transactions. Depending on the property details, it can provide substantial protection to both parties involved. When properly drafted and executed, they ensure that the previous owner will be liable for any title issues incurred after the transfer of ownership. While these deeds may present certain risks compared to a general warranty deed, their usage in real estate can often be highly beneficial and provide peace of mind.