What is a Special Warranty Deed?

Definition of a Special Warranty Deed

A Special Warranty Deed is a legal document in real estate transactions where the seller (grantor) guarantees that they have not done anything to adversely affect the property's title during their ownership. It limits the warranty period to the time the seller owned the property, unlike a General Warranty Deed, which guarantees clear title throughout the property's entire history.

How Does a Special Warranty Deed Work?

The primary function of a Special Warranty Deed is to assure the buyer (grantee) that:

• The grantor legally owns the property and has the right to transfer it.
• The property was not encumbered or impaired by the grantor during their ownership period, except as explicitly disclosed.

Differences Between Special Warranty and General Warranty Deeds

The critical distinction lies in the scope of protection:

• General Warranty Deed: Guarantees clear title throughout the entire history of the property.
• Special Warranty Deed: Only guarantees clear title during the seller’s ownership period.

When is a Special Warranty Deed Used?

Special Warranty Deeds are commonly utilized in:

• Commercial real estate transactions.
• Foreclosure or REO property sales.
• Transactions involving trusts, estates, or corporations where the seller cannot fully warrant prior title history.

Benefits and Limitations

Benefits

• Reduces seller liability.
• Suitable for transactions where the property's full history is unclear.
• Expedites transactions in commercial real estate and foreclosure scenarios.

Limitations

• Offers less protection to buyers against historical claims or liens prior to seller ownership.
• Necessitates extensive title searches and possibly additional title insurance.

Real-Life Examples and Implications

Buyers accepting a Special Warranty Deed must conduct thorough due diligence. In cases where buyers neglected extensive title research, they later discovered outstanding liens or claims from previous owners, leading to costly legal proceedings or even loss of the property.

Conclusion and Recommendations

While a Special Warranty Deed can be advantageous in specific real estate transactions, buyers should always:

• Perform thorough title searches.
• Consider purchasing comprehensive title insurance.
• Consult with experienced real estate attorneys or surveyors like Alliance Land Surveyors to navigate complexities.

For personalized advice and professional land surveying services, please contact Alliance Land Surveyors.