A warranty deed is a legal document that people use to transfer property. A warranty deed states that a property owner has sole claim to the property – in other words, that no other entity has a lien on the piece of land or home.
In a warranty deed, one will include a legal description of the property, the name of the person transferring the property (grantor), the name of the person taking ownership (grantee), and details of the ownership transfer. It is necessary to use a warranty deed to secure the grantee’s legal ownership and claim to the property.
Warranty Deed vs. Quitclaim Deed
Warranty deeds and quitclaim deeds are often used in conjunction with one another. Yet these two deeds are very different.
A quitclaim deed, or a non-warranty deed, offers much less legal protection than a warranty deed. Two or more parties who are in a personal or professional relationship tend to use quitclaim deeds, often when the property isn’t sold. A quitclaim gives the new owner no legal recourse against the grantor if the property has an issue. You would not want to use a quitclaim deed to transfer property to a stranger, or if there is any chance of legal matters down the road.
A warranty deed gives the property purchaser much more protection. With a warranty deed, the person purchasing the property has legal protection from any prior liens, claims, or demands against the property that occurred in the past. The new owner has full rights to the property, and can sell it if desired. Receiving a warranty deed guarantees that there are no liens or encumbrances on the property. The new owner will receive proof of all previous titles. Warranty deeds are most appropriate during traditional property sales, whereas quitclaim deeds are used most often among family members, beneficiaries, and heirs.
Types of Warranty Deeds
Within the two main types of deeds, warranty and quitclaim, there are other categories. A general warranty deed provides maximum protection to the grantee. It is a document that states the grantor is the rightful owner, he/she has the right to transfer the property, the land has no outstanding claims from lenders, and someone with a better claim to the title can’t take the property. Traditional warranty deeds come with title insurance policies to protect the grantee from ownership disputes.
Aside from a general warranty deed, there are:
- Special warranty deed. This type of deed does not guarantee that the owner will enjoy the property claim-free for life. Instead, it ensures that the property is currently claim-free for the amount of time that the current owner has had the title. If claims crop up in the future, the grantee does not have the right to pursue claims against the grantor for compensation or legal solutions.
- Grant deed. A grant deed is similar to the general warranty deed. Depending on the jurisdiction, a landowner may use a grant deed instead of a warranty for basically the same protections. Grant deeds transfer property from the grantor to the grantee with warranties that no one else has a claim to the land, and that there are no liens or restrictions. The only protection it doesn’t have, compared to the general deed, is safety against third-party claims.
- Bargain and sale deed. This deed does not offer any warranties against encumbrances on the property. It merely implies that the grantor has the title to the property, not that the title is free from defects. If ownership and claim problems occur down the road, the grantee could be in trouble with a bargain and sale deed. Foreclosure actions frequently use this type of deed.
Choose your type of property transfer deed wisely. Understand the nuances and differences between each type of deed before you sign anything. Signing the wrong type of deed could lead to significant ownership and claim issues down the road. As a general rule of thumb, know that a general or traditional warranty deed offers the best protection, and a quitclaim deed offers the least protection.
How to Get a Warranty Deed
One would want a warranty deed for the purchase and sale of property, to transfer property ownership to a trust, or to buy/sell real property as a business owner. As a property owner and grantor, you can obtain a warranty deed for the transfer of real estate through a local realtor’s office, or with an online search for a template. To make the form legally binding, you must sign it in front of a notary public. You must then file your signed and notarized deed with the county office that’s in charge of recording property documents. Once the grantee signs the warranty deed, he/she legally has ownership and claim to the property.
Before you can go about getting a warranty deed, you must ensure that the real property has no liens, claims, or encumbrances. You can do this with an online public records search. A public records search using the address of the property in question will come up with vital real property documents, tax reports, deed and mortgage reports, liens, title history, and more. As the transferor of the property, it’s your responsibility to ensure that you have the right to give away full legal ownership. Failing to uphold your end of the bargain in a warranty deed can make you liable for paying for property defects after both parties sign the deed. A simple records search can give you confidence and peace of mind while drawing up a warranty deed.
Warranty deeds are excellent tools for the legal transfer of property with maximum ownership protection. As a real estate investor, purchaser, or lender, a warranty deed can be the best option for safeguarding your asset. Be wary of quitclaim deeds and deeds with lesser protections unless you’re engaging in the transfer with someone you know well and trust, like a family member. Otherwise, you could find yourself in a legal battle for the land in the future. Speak with a realtor and your county clerk’s office if you have any questions or issues with a warranty deed or property transfer.