A warranty deed is a legal document that serves as a sort of protection to the buyer in a real estate transaction. Take a delve and discover all you need to know about a warranty deed.*

Guarantee deed
Guarantee deed

What is A Warranty Deed?

The seller (grantor), and the buyer (grantee), engage in a legal real estate transaction through a warranty deed. This document safeguards the buyer by ensuring that the seller possesses a clear title to the property. It ensures the buyer is free from any outstanding liens or mortgages. Also, it guarantees that there will be no future claims to the property’s title.

Most lenders require properties they finance to have a warranty deed.

How Warranty Deeds Work

In a real estate transaction, a legal document known as a deed facilitates the transfer of real estate property from a seller to a buyer. Throughout this process, a title company conducts a comprehensive title search, examining both current and past ownership records of the property. The aim is to identify any defects or issues that may have impacted the title during previous ownership.

With a warranty deed, the seller, or grantor, assumes responsibility for any breaches discovered during the title search. This deed ensures that the buyer will not be held accountable for any past title defects or encumbrances.

During the closing of the sale, the grantor delivers the warranty deed to the grantee. This document includes a precise legal description of the property being transferred. It adheres to the state laws where the property is situated by being signed and witnessed accordingly. Also, it incorporates legal language confirming the seller’s conveyance of the property to the buyer. Finally, it provides evidence of the monetary consideration paid for the property.

Types of Warranty Deeds

There are two types of warranty deeds viz:

General Warranty Deed

  • The grantor affirms their rightful ownership of the property and asserts the legal authority to transfer the title in a sale.
  • The grantor assures that the property is unencumbered by any liens and is devoid of any outstanding claims from creditors who might assert it as collateral.
  • It guarantees that the title possesses the strength to withstand challenges from third parties seeking ownership of the property.

Special Warranty Deed

  • States that the grantor currently holds the title and that no encumbrances have arisen on the property during the grantor’s ownership period.
  • Specifies that the grantor does not provide a guarantee against any defects in clear title that may have existed before they acquired possession of the property.

How to Get A Warranty Deed

A real estate lawyer or agent facilitates a warranty deed. Whether engaged in buying or selling a property, a warranty deed provides a safeguard against potential title issues.

For sellers or grantors, having a warranty deed instills confidence in potential buyers regarding the property.Just as much, buyers typically seek the highest level of protection and peace of mind when investing in real estate. If there are no outstanding liens or claims on the property’s title, the presence of a warranty deed can contribute to a successful and mutually beneficial transaction.

Other Types of Deeds

  • The quitclaim deed facilitates the transfer of property from one individual to another without a sale. It commonly occurs among family members or during divorce proceedings. Upon the signing of the deed, any claim to the property is surrendered. This prohibits the former owner from asserting any future interests in the property.
  • A deed in lieu transfers property to the lender as an alternative to foreclosure when a borrower defaults on their mortgage. This arrangement avoids recording a foreclosure on the borrower’s credit history.
  • A special purpose deed is employed in court proceedings. It allows individuals acting on behalf of the property to execute transfers without incurring personal liability.

Bottom Line

Acquiring a home constitutes a significant undertaking, often representing the most substantial investment in one’s lifetime. Therefore, prioritising the security of your property rights is paramount. In this context, a warranty deed assumes a crucial role. This document assures that the seller possesses the legal authority to sell the property. Likewise, it ensures there are no unresolved debts associated with it. By having a warranty deed in place, you, as the new owner, can proceed with confidence.

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By Nayomi

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