subject: Importance of Using a Warranty Deed When Transferring Real Estate [print this page] Importance of Using a Warranty Deed When Transferring Real Estate
A warranty deed is used in real estate transfers to provide a written guarantee that the property is free from encumbrances that could interfere with obtaining a clear title. Two types of warranty deeds are available and include 'General' and 'Limited'.
A general warranty deed encompasses not only the current owner, but previous owners dating all the way back to the origination date of the property. Limited warranty deeds only encompass the current owner. If problems arise from previous owners, buyers have no legal recourse when limited deeds are used. Therefore, it is always best to obtain a general deed whenever possible.
Deeds are recorded through local courts when realty is transferred via sale, gift, or inheritance. Deeds must be filed in a timely fashion or new owners could lose the right to pursue the property owner is problems arise after the transfer.
Warranty deeds contain specific legalese which covers buyers, sellers, and covenants. The current property owner is listed as the Grantor, while the new owner is listed as the Grantee.
General deeds include three present covenants and three future covenants.
Present include: Covenant of Seisin, Right to Convey, and Covenant against Encumbrances. The first two guarantee Grantors' own the property or have the right to 'convey' it to another. Covenant of Encumbrances offers written promise that nothing is attached to the property that could interfere with the transfer. This could include creditor judgments, tax liens, or mortgage claims.
Future include: Covenant of Warranty, Quiet Enjoyment, and Further Assurances. The first two provide the Grantee with promise that he will not be held financially responsible if claims are presented against the property or if property defects were not properly disclosed during the sale process. Future Assurances offers Grantee protection if problems occur that prohibit them from being able to obtain a new title.
Limited warranty deeds only protect Grantees from title problems that occur during the seller's time of ownership. If problems stem from previous owners the Grantee cannot take legal action against the Grantor.
There is a small loophole that gives Grantees right to pursue Grantor's when property is guaranteed using Limited warranty deeds. If Grantees can prove problems existed while the property was in Grantor's possession they can seek legal damages. However, this is often very difficult to prove and research and legal fees can be costly.
Both general and limited warranty deeds need to be recorded through the local County Recorder's office. It is strongly recommended to obtain legal counsel to ensure real estate deeds are properly executed and recorded. Most attorneys charge a nominal fee for this service.
Once a warranty deed is recorded it becomes a matter of public record. This can be beneficial for buyers because they can research information to determine how many people have owned the property since it was built. Public records are available at local court houses and oftentimes presented online. Records can be viewed at courts for no charge, but a nominal fee is assessed for printed copies.
