What is the warranty of title?
A seller’s assurance to a buyer that they are the only ones with the legal authority to transfer ownership of the property is known as a warranty of title. Furthermore, a guarantee of identification may ensure that the transferred property is free from copyright, patent, or trademark rights held by third parties.
Understanding Warranty of Title
A warranty deed, used to transfer property in a transaction lawfully, contains a formal title guarantee. This paperwork ensures that the seller is the property’s legitimate owner and that no other party, such as the Internal Revenue Service or an ex-spouse, has a claim or lien on it. The promise of title in a warranty deed protects the buyer’s rights and provides them with legal remedies if a third party attempts to claim the property.
Other kinds of deeds, such as quitclaim deeds, don’t guarantee a title. Although a valid title isn’t guaranteed, the donor gives up land ownership. The buyer would not have the safeguards that a warranty of title would provide if a dispute over ownership eventually emerged.
How to Verify a Transaction Using a Warranty of Title
In most transactions, there is an automatic title guarantee, but when the seller acts as a representative, there could not be any. This scenario may occur at an estate sale, sheriff’s sale, or auction. In these situations, the individual selling the property is not the owner. Therefore, they may be unaware of any other party’s ownership interests.
If a dispute or problem is associated with the property, a warranty of title may provide the buyer with legal rights to sue the seller. For instance, the seller may have yet to disclose to the heir of a previous owner that they had an outstanding claim to the property. The buyer may file a lawsuit to recover damages and the money they paid for the transaction.
A transaction’s completion may also be fraught with dangers, such as lingering disagreements about the property’s borders. The property lines may vary from what the seller represented to the buyer, according to the owners of the nearby real estate. The possibility of liens for unpaid taxes and bills might make the sale more difficult.
The seller may provide a title guarantee free from encumbrances if the property is free of impairments and ownership is verified correctly.
