What Is a Special Warranty Deed?

A deed is a legal document that conveys a property title to you after buying real estate. Your new deed becomes effective and binding when you receive it and confirms that you are the current owner of the property purchased. The same rules apply to commercial real estate deeds. You can find an example of such a deed in the form of the general warranty deed form. 

Deeds further shield you and your property against third-party claims after taking ownership. A special warranty deed explicitly protects buyers from legal action or title issues stemming from the acts of the property’s current owner.

Let’s examine special warranty deeds in detail and discover how they can secure your interests when investing in real estate.

Simply put, a special warranty deed (a.k.a. limited warranty deed) assures the real estate buyer that the seller actually owns the property and that seller’s property title has not faced legal challenges during his or her possession. The seller, however, makes no guarantees about any period before taking ownership. This is often a complex subject, so it can be extremely valuable to consult with a lawyer near you. 

Real property sometimes has debts like mortgages or liens attached to it. These legal obligations become part of the existing title until the property owner satisfies the debts. Encumbrances thus may follow the property after a grantor sells it.

A special warranty deed legally transfers real estate title and ownership to you and includes the following guarantees from the property’s previous owner:

The courts will enforce a properly executed special warranty deed only when it holds the following requisite legal elements:

For drafting legal documents, you can refer to other real estate-related templates available online.

Special warranty deeds are unique and not commonly used for residential real estate sale transactions. This means that you will probably not receive a special warranty deed after purchasing a family home or an apartment — grantors execute general warranty deeds for these types of real estate investments.

However, most grantees handling Will and Trust matters protect themselves by issuing special warranty deeds to parties who inherit property.

When a loved one passes away, his or her estate often moves to probate court for proper distribution among heirs and beneficiaries. Probate judges assign executors (when a Will exists) or court-appointed fiduciaries (when the estate is intestate) to pay the deceased’s debts and re-title remaining real estate assets, according to the law.

Obviously, the law should not hold executors legally responsible for faults or defects found in a deceased’s property title since these fiduciaries never owned or possessed the real estate held in probate. The rules of special warranty deeds come into play in this situation. The legal document limits an executor’s warranties of clean title only to the time the fiduciary worked on the probate matter.

Business entities may similarly use special warranty deeds when they cannot offer buyers comprehensive warranties or protections.

For example, a bank forecloses on a home but is unfamiliar with the property’s creditor history or third-party future interest claims. The bank consequently can only make guarantees about the property during the time it repossessed and resold the property — executing a special warranty deed to the buyer thus protecting the entity from possible future litigation.

Commercial properties often switch owners, handle commercial liens, or manage bank foreclosures, situations that call for sellers of commercial real estate to execute special warranty deeds to protect their interests.

Unlike special warranty deeds, other deeds come with no warranties and no guarantees about the property at all. These are classified as non-warranty deeds. When you evaluate the level of protection (warranty) you have when purchasing a property, non-warranty is at the bottom, with nothing. 

Then, there are quitclaim deeds. Contrary to special warranty deeds, quitclaim deeds make zero promises about the property, its condition, or what the current owner did or did not do to it. Moreover, with a quitclaim, there is no promise that the current owner has an interest in the property they are selling. There are also general warranty deeds which, as the name suggests, apply to available levels of protection.

In general, a special warranty deed differs from other deeds in two key ways:

A special warranty deed offers buyers limited guarantees and only covers a specific period. Let’s consider the pros and cons of executing the special warranty deed.

Today, we touched on the meaning of special warranty deeds and the implications of executing these legal documents when purchasing real estate. For more comprehensive information about special warranty deeds and other types of legal documents, you may visit Lawrina.

Grantors who convey special warranty deeds issue a guarantee against defects in clear title only during their ownership. In other words, the seller doesn’t protect against debts or liens against the property that existed before taking possession of the asset.

Residential property buyers generally will not receive a special warranty deed from the seller. However, you will most likely accept this deed when buying commercial property, purchasing assets in foreclosure, or obtaining real property held in probate.