A general warranty deed is the most common type of deed used for transferring real estate. It basically promises that:
Therefore, the seller must defend the buyer against all claims on the validity of the title, regardless of when the alleged defect on the title occurred.
A “defect” on a title prevents the property from being sold until the defect is remedied. Common examples of defects include liens, encumbrances, or judgments against the title. A defect can also occur if a deed transferring the property is improperly executed or recorded.
A special warranty deed makes the same warranties as a general warranty deed except that those promises only apply to problems with the title that may have arisen during the seller’s own possession of the property. The seller isn’t making any warranties as to whether problems in the chain of title arose under prior owners of the property. What this means for a potential buyer is that the seller will not protect the buyer should anyone allege a defect in the title occurring before the seller had possession. The seller only promises to defend against defects that may have occurred while he or she owned the property.
A quit claim deed provides the buyer the least amount of protection but is also the quickest and cleanest way to transfer property title. In it, the seller makes no warranties whatsoever as to whether he or she has proper title to the property. Why would anyone use this, you ask? Most of the time, quit claim deeds are used for land transfers between family members and in similar situations where there is a lot of trust between the buyer and seller.
The majority of transactions call for general warranty deeds because the buyer will want assurances that he or she is getting good and proper title to the property. To do this, the buyer will normally obtain a full title search and title insurance.
Special warranty deeds are often used by builders because they only owned the property for a short period of time during construction and don’t want to make promises as to the prior owners. They are also used with commercial buyers and sellers and in foreclosure actions because such parties never had a very close relationship with the property and normally won’t make warranties as to prior owners in the chain of title.
Finally, as mentioned before, quit claim deeds are mainly used between two parties that have a high degree of mutual trust in each other, such as between family members. A father may quit-claim a property to his son because the father knows the son would never take him to court over the matter and the son knows the father would still defend his title if there were ever a claim against it. Another common instance people use quit claim deeds for is to transfer property to a revocable living trust. The person creating the trust still usually has control over the property after it is put in the trust and the change in ownership is in name only, so it’s not necessary to make any warranties.
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