What is a warranty deed?

A warranty deed is a legally binding instrument that protects the buyer by guaranteeing that the seller has free and clear title to the property, is not subject to any liens or mortgages, and that no one else can challenge the seller’s ownership in the future. A warranty deed involves the buyer, often called the grantee, and the seller, also called the grantor. Either party may be a person or a company. Lenders usually require a warranty deed for properties they finance.

How Warranty Deeds Work

A legal document known as a deed transfers real estate from one party—a seller to a buyer—to another. During a real estate transaction, a title business conducts a thorough title search of the property’s previous and current owners to check for any flaws or problems that may have affected the title during that ownership.

A warranty deed binds the seller or grantor to pay for any breach discovered during the title search, even if the violation happened before the grantor acquired the property or without their knowledge. It guarantees that any previous title flaws or encumbrances won’t fall under the buyer’s responsibility.

At the time of the sale’s closure, the grantee receives the warranty deed. It contains legal words of conveyance indicating that the seller is giving the buyer the property, is signed and witnessed by the state law where the property is located, provides an accurate legal description of the property being conveyed, and provides evidence of the money or consideration paid for.

Warranty Deed Types

General Warranty Deed: • The grantor guarantees that the property is free and clear of liens and that no creditor has any outstanding claims on the property that could use it as collateral. • The grantor guarantees that they are the property’s legitimate owners and have the legal right to transfer the property’s title in a sale. • A guarantee that the title can withstand any claims to ownership by third parties.

Particular Guarantee: The grantor does not provide a guarantee against any apparent title flaws that existed before the grantor took possession of the property. The deed conveys that the grantor owns the property and that there has been no encumbrance throughout the grantor’s ownership term.

How to Obtain a Deed of Warranty

Buyers and sellers can obtain a warranty deed with the assistance of a real estate agent or real estate attorney. A warranty deed may protect against title issues when purchasing or selling real estate.

Possessing a warranty deed in place will provide you, the seller or grantor, with some peace of mind about the property. Buyers are probably searching for maximum security and comfort when purchasing real estate. A successful transaction for both parties might result from a warranty deed if there are no existing liens or claims on the property’s title.

Different Kinds of Acts

• In most cases, the quitclaim deed transfers property between family members or during divorce procedures without a sale. Any claim to the property is given up when signing the act, and a quitclaim deed shields the owner from any further ownership interests in the land.
• When borrowers fall behind on their mortgage and want to avoid foreclosure appearing on their credit record, they may transfer the property to the lender via a deed instead of foreclosure.
• During legal processes, a special purpose deed enables property representatives to transfer assets without taking on personal accountability.

What Distinctions Exist Between a Warranty Deed and Title Insurance?

After completing a title search, a title company looks for problems or inaccuracies in public records. Suppose a title defect or a claim is made against the title. In that case, the new owner can hold the previous owner accountable thanks to the guarantees and disclosures in a general warranty deed. Unlike the ordinary warranty deed, title insurance protects various possible claims, such as competing estate wills or tax liens.

What Sort of Claims Do Warranty Deeds Specifically Cover?

The buyer or new owner will not be subject to the penalties imposed by the previous owner for breaking the rules or failing to pay HOA dues.

What Dangers Do Special Warranty Deeds Pose? In contrast to a general warranty deed, a title problem that could have arisen before the seller assumed ownership is not the seller’s responsibility; this puts the buyer at risk because they will not have any legal protection for any possible title difficulties that may develop after the real estate deal is completed.

The Final Word

A warranty deed is a title insurance policy for real estate that guarantees the seller has no liens or mortgages against the property. A package that includes a warranty deed, a title search, and title insurance offers the best protection for a real estate buyer. This assures that there are no title flaws and that there won’t be any future claims made against the property title.

Conclusion

• A warranty deed guarantees the seller’s free and clear title to the property, free and clear of any liens or mortgages, and the buyer’s protection.
• A warranty deed, a legally binding document in real estate, shields the purchaser from subsequent claims to the property’s title.
• A warranty deed is often required by lenders for properties they finance.
• A property’s buyer is referred to as the grantee, and the seller is known as the grantor.