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What is a warranty deed?

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    Whether you’re buying or selling a house, there are many legal documents involved in the lawful exchange of real estate. A warranty deed is one of them. This document is the seller’s (grantor) promise to the buyer (grantee) that they are the legal owner of the property — and that there are no outstanding liens, mortgages or claims on the property — ahead of the official transfer of ownership. Let’s learn more about when a warranty deed would be necessary and the differences between various types of warranty deeds.

    What is a warranty deed used for?

    A warranty deed is a legal document involved in the exchange of real estate, more specifically when a seller officially grants the buyer their property. This document captures information about the home sale, including information about the property and any liens — or outlying legal claims of ownership — that might exist. It may also include how much the property was purchased for, whether there are any easements and any other specifics to the real estate exchange in question. Essentially, the point of the warranty deed is to prove that there is no outstanding information being kept from the buyer and that the seller has the right to turn over the property.

    The buyer may need to secure a warranty deed when applying for a mortgage or insurance. The document is typically obtained through the buyer’s real estate agent or attorney, but a template can also be obtained online and then personalized. The deed is usually signed before the title is officially transferred and the money leaves escrow.

    If any problems arise after signing a warranty deed, the seller can be subject to legal action from the buyer, depending on the issue.

    Types of warranty deeds

    There are three main types of warranty deeds with varying levels of promise the seller makes regarding legal ownership of the property and whether there is a clear title.

    General warranty deed

    A general warranty deed is the most common because it has the highest form of protection for the buyer. It guarantees there are no current or prior issues with the home or its title that the buyer is unaware of.

    Statutory warranty deed

    A statutory warranty deed is like a general warranty deed, but it only protects what’s covered under your state’s law regarding title issues, liens and other details related to the seller’s right to lawfully transfer ownership. This doesn’t necessarily cover any possible situation that may arise. For example, if an outstanding mortgage comes up but isn’t specifically protected under the state’s law, then the statutory warranty deed may not protect the buyer in that circumstance. Although it’s legally binding and is meant to cover most scenarios, it is not necessarily all-encompassing.

    Special warranty deed

    A special warranty deed, or limited warranty deed, has the least amount of coverage out of the three. It guarantees that the seller didn’t incur any title issues while they owned the property, but it doesn’t cover any title issues there may have been before the seller took ownership.

    Warranty deed vs. quitclaim deed

    As mentioned, a warranty deed is the seller’s promise to a buyer that they are lawfully selling a property and that the buyer can enjoy the property peacefully. A quitclaim deed transfers rights to a property — typically between relatives — without a true warranty or guarantee. They’re usually used between two parties who know and trust one another.

    In summary

    There are many documents involved in the home buying journey. A warranty deed is one that helps ensure the lawful transfer of ownership between a seller (the grantor) and the buyer (the grantee). Warranty deeds are meant to protect the buyer from any issues that may arise with their new home, particularly with the title.

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