6 min read May 23, 2024

Understanding Warranty Deeds: Your Key to Property Ownership

Editor
Edited By

Prayas Biswas

icon
Editor
Edited By

Prayas Biswas

Editor, Houzeo
About

Prayas B. is a detail-oriented content editor specializing in American real estate. In his free time, he enjoys hitting the pitch for a game of football or watching motorsports.

Find Prayas Here

With 4.11 million homes sold in May, the US housing sector is flourishing this year. In such a robust environment, securing ownership is important. Warranty deeds are your legal shield in validating real estate transactions.

A warranty deed records and transfers property from a seller to you. This simple documentation protects you from a concealed tax lien. Understand the intricacies of the deed for a secure homeownership process. 

Find Your Dream Home 🏡

View 1,290,277 Homes For Sale in the US

Where do you want to live?

Please enter valid address

🚀 Important Facts on Warranty Deeds

  • It is a legally binding document that assures the buyer of clear ownership rights to a property.
  • It provides assurances to buyers regarding the property’s title, condition, and ownership rights.
  • Warranty deeds cover clear title, absence of encumbrances, possession, and quiet enjoyment rights.
  • They are an essential part of purchasing real estate. They protect the buyer from possible disputes and troubles.

What Is a Warranty Deed?

A warranty deed transfers real estate ownership from the seller to the buyer. It also uncovers liens, unpaid taxes, and other legal issues that might affect the buyer’s property rights. A title company usually conducts this search for ownership difficulties before closing a sale. 

After the title search and handling any difficulties, the warranty deed is drafted and executed during closing. By accepting it, the seller guarantees title and ownership rights to the buyer.

This deed keeps the seller responsible for future problems despite not knowing about title issues or faults at the time of sale. The buyer won’t have to resolve earlier ownership issues themselves with this protection.

How Does a Warranty Deed Work?

You don’t want to purchase a home just to find out that there is a concealed tax lien. A warranty deed can help avoid such issues. It serves as the seller’s assurance that they are the rightful owners and that there are no outstanding liens or claims against the property. 

It safeguards you in the event of any unreported problems after the sale. It also acts as a permanent record of the transaction.

Types of Warranty Deeds

A warranty deed does more than merely transfer ownership. It also covers guarantees made by the seller to the purchaser. Covenants in warranty deeds are the seller’s promises to the buyer on the property’s title and ownership rights.

These covenants ensure the seller’s legal right to sell, and that the property is clear of unrecognized claims. There are two types of warranty deeds, each with different levels of protection.

What Is a General Warranty Deed?

A general warranty deed offers the highest level of security. The seller guarantees they are the sole owner, with no liens or issues. They’re responsible for any problems post-purchase, even from previous owners.

What Is a Special Warranty Deed?

A special warranty deed offers limited title guarantees. It only covers problems that arise while the seller is the owner. Compared to general warranty deeds, it offers less protection and restricts the seller’s obligation to title issues that arise under their ownership. 

How to Get a Warranty Deed

Here are the steps involved in getting a warranty deed when buying a property:

  • Conduct a Title Search: You must search for the property title thoroughly before drafting the warranty deed. This involves checking public records to verify the seller’s ownership and find title issues. 
  • Prepare the Warranty Deed: Once you confirm the title is clear of issues, you can prepare a general warranty deed. This legal document will include all the necessary information about the property.
  • Review and Sign the Deed: You and the seller should check the warranty deed for accuracy. Both parties’ seal and signature will be added to the warranty deed if you reach an agreement. 
  • Pay Transfer Taxes and Recording Fees: Your state and municipal regulations may require you to pay transfer taxes and recording costs before the deed is recorded. 
  • Record the Deed: The warranty deed must be submitted to the county recorder. It will be sent to you with the recording information, such as the book and page number. This recorded copy validates the ownership transfer. 

What is Covered by a Warranty Deed? 

A warranty deed provides specific guarantees and protections to the buyer regarding the ownership and condition of the property being transferred. Typically, a warranty deed covers the following:

  • Clear Title: The seller assures that they hold a clear title, free from any outstanding ownership claims. It also guarantees that there are no outstanding defects in the property’s title.
  • No Encumbrances: The deed guarantees there are no liens, mortgages, judgments, or other legal encumbrances against the property. Encumbrances are claims or liabilities that could affect the buyer’s ownership rights.
  • Possession and Quiet Enjoyment: The buyer has the right to take possession of the property and use it without interference or disturbance from others claiming ownership.
  • Defense of Title: If any ownership issues or claims arise, the seller must defend the buyer’s rights and cover legal costs.

Warranty Deed vs. Title Insurance

A warranty deed provides an absolute guarantee that there are no outstanding claims to the property. On the other hand, title insurance guards the buyer from financial loss brought on by ownership problems. 

Title insurance protects against past ownership disputes, unidentified liens, forgeries, and errors in public records. It can also discourage lawsuits from other parties or heirs who might be interested in the property. 

An unreported heir contesting the transaction, for example, would not be covered by a warranty deed. This is when title insurance is crucial. A warranty deed, however, provides certain assurances from the seller.

Title insurance would pay for the buyer’s legal expenses to defend against a surprise lien or other ownership issue. For instance, it would pay for the buyer’s claim or the expenses of settling a problem if a previously unknown lien materialized after the acquisition.

Bottom Line

A general warranty deed is an effective tool in property ownership. It provides buyers with the assurance and security they need to complete the deal successfully. 

Navigating the complexity of property ownership can be difficult, but understanding warranty deeds can help protect your investment. At Houzeo, our experienced real estate professionals are committed to guiding you through the complex world of buying property hassle-free. 

Safeguard your properties with our full suite of services. Access our list of respected attorneys and title companies around you to make informed decisions throughout the ownership transfer process.

Find Your New Home With Houzeo

With thousands of property listings, Houzeo.com is one of the biggest property listing sites in the US. Find condos, townhouses, co-ops, and other types of homes for sale on Houzeo.

Find Your Dream Home 🏡

View 1,290,277 Homes For Sale in the US

Where do you want to live?

Please enter valid address

» NEED MORE CLARITY? Read these exclusive Houzeo reviews and learn why the platform is the best in America’s competitive housing market.

Frequently Asked Questions

What risks do special warranty deeds pose?

Special warranty deeds do not cover faults in a title that existed prior to the seller's possession. When a property is ceded using a special warranty deed, the seller guarantees that there will be no faults or issues with the title throughout the buyer’s ownership period.

Do I need a lawyer to get a warranty deed?

You don't need a lawyer to get a warranty deed. However, we advise you to hire one, especially if you're not familiar with real estate law. An attorney can ensure the deed is drafted correctly, check the title for issues, and negotiate with the other party.

What happens if there's a defect in the title after receiving a warranty deed?

If a fault with the title is discovered after receiving a warranty deed, the buyer may pursue legal action against the seller. This depends on the flaw and the provisions of the deed. The buyer may be able to obtain compensation, or force the seller to defend the transferred ownership.

Does a warranty deed prove ownership?

Indeed, a warranty deed is a legal document that attests to the buyer’s ownership of real estate. It transfers ownership from the seller to the buyer, and ensures that the seller has a clear title to the property. This also shields the purchaser from future claims.

Cross

Save $39

Only on Gold and Platinum plans

Use Coupon Code:

Copied
4.9 out of 5 Star Rated Houzeo Concierge

Need help? Call us on

(844) 448-0110