What is a Special Warranty Deed when buying property?
I've noticed many property buyers get confused about warranty deeds and their implications. Let me break down everything you need to know about Special Warranty Deeds - a unique type of property deed that offers specific protections during real estate transactions.
Special Warranty Deed: A Special Warranty Deed is a legal document that transfers property ownership while providing limited protection to the buyer against title defects. The grantor only guarantees against claims or issues that arose during their own period of ownership, rather than protecting against all possible past title problems.
Understanding Special Warranty Deeds
Special Warranty Deeds contain several key components that make them unique. First, they offer limited warranty coverage - but what does that mean for you? The current property owner (grantor) promises that they haven't created any title problems during their ownership. They make no promises about what happened before they owned the property.
These deeds differ from other common types in significant ways:
General Warranty Deed: Protects against all title defects, regardless of when they occurred
Quitclaim Deed: Offers no warranties or protections at all
Special Warranty Deed: Falls between these two, offering limited protection
Benefits and Limitations
Special Warranty Deeds bring several advantages to the table. They often cost less than General Warranty Deeds and can speed up closing times. Property sellers prefer them since they're only responsible for issues that popped up during their ownership.
However, you should know about potential drawbacks:
No protection against problems from before the current owner's time
You might face issues from past claims or liens
Title insurance becomes extra important
Common Uses
I see Special Warranty Deeds used most often in:
Commercial property sales
Properties sold by banks after foreclosure
Estate sales where heirs sell inherited property
New construction sales
Protection Measures
Title insurance becomes your best friend with a Special Warranty Deed. A thorough title search can reveal potential issues before you buy. I always suggest working with a real estate attorney who can review your deed and explain any risks specific to your situation.
Common Questions and Misconceptions
"Is a Special Warranty Deed risky?"
Not necessarily - with proper title insurance and due diligence, you can minimize risks significantly.
"Do I need title insurance with a Special Warranty Deed?"
Yes! Title insurance fills the protection gaps left by Special Warranty Deeds.
"Can I convert my Special Warranty Deed to a General Warranty Deed?"
No - once recorded, you cannot change the deed type without a new transaction.
Making the Right Choice
Accept a Special Warranty Deed if:
You're buying new construction
The seller is a bank or corporation
You have good title insurance coverage
Request a different deed type if:
The property has a complex ownership history
You're buying from a private seller who can provide a General Warranty Deed
The title search reveals past issues
Conclusion
Special Warranty Deeds serve an important purpose in real estate transactions. While they offer limited protection, they can work well with proper safeguards in place. Contact Bellhaven Real Estate today for guidance on your property purchase or sale - we'll help you navigate deed choices with confidence.