Transfers By Warranty Deed & Special Warranty Deed

Instructor: Shawn Grimsley

Shawn has a masters of public administration, JD, and a BA in political science.

While deeds are used to transfer real estate, not all deeds offer the same level of protection to buyers. In this lesson, you'll learn about the differences between warranty deeds and special warranty deeds. A short quiz follows the lesson.

Deed Defined

Before learning about different types of deeds, let's take a quick moment to review what a deed is. A deed is a legal instrument that is used to convey title to real estate from one person to another. The person that is conveying the property is called the grantor and the person receiving the property is called the grantee. It's important to remember that not all deeds are the same. Some deeds provide more protection to the grantee through covenants for title while others (such as quitclaim deeds) provide no such protection.

Covenants for Title

In the most basic sense, a covenant is a legally binding promise or agreement. A covenant for title is a representation the grantor makes to the grantee regarding title to the property the grantee is receiving. Six covenants for title are commonly used when conveying real estate by deed:

  • The covenant of seisin guarantees that the grantor holds an interest in the property of the same quality and quantity that she is transferring with the deed. If the deed purports to convey a fee simple absolute (the least restrictive type of estate), the covenant of seisin guarantees that the grantor holds absolute ownership of the real estate.
  • The covenant of right to convey assures the grantee that the grantor has the legal right and power to convey the real estate.
  • The covenant against encumbrances asserts that there are no encumbrances on the property that are not stated in the deed. An encumbrance is a claim or interest that burdens the real estate (such as a lien).
  • The covenant of quiet enjoyment and covenant of warranty generally hold the same promise nowadays. The grantor warrants that the grantee will have the continuous right to possess and use the real property and that he will defend the grantee against claims on the property made by third parties.
  • The covenant for further assurance states that the grantor warrants that he will execute and deliver necessary documents in the future to ensure that the grantee has the full title to the property that was intended to be conveyed. (This covenant is not as prevalent as the other covenants.)

You can categorize covenants as present or future. The covenants of seisin, right to convey and against encumbrances are present covenants. The grantor can only breach a present covenant at the time of conveyance. If it's not breached then, it's never breached. The covenant of quiet enjoyment, covenant of warranty and covenant for further assurance are future covenants. A future covenant is breached only if the grantee is evicted by superior claim of ownership on the property.

Warranty Deed vs. Special Warranty Deed

If you are a grantee, the deed that provides you the most protection is a warranty deed, sometimes called a general warranty deed. If you receive a warranty deed, the covenants apply from the time that the grantor owned the property all the way back to the first owner of the property. In other words, if there is a defect in title that originates years before the grantor owned the property, the grantor is still liable under the covenants for title.

A special warranty deed does not provide nearly as much protection as a warranty deed. A special warranty deed only warrants that the grantor has title and will defend the title against claims of people claiming 'by, through, or under' the grantor. Basically, this means the warranties only apply to claims that arise during the grantor's ownership of the property. Consequently, if a claim dates back prior to the grantor's ownership of the real estate, his covenants do not apply.

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