Warranty Deed: Definition, Types And FAQs

When you’re buying a house, it’s important to familiarize yourself with the documents you’ll receive throughout the process. After all, it’s likely the largest purchase you’ll make in your life and you want to protect your significant investment.

The warranty deed is one of the most important documents involved in the home-buying process. It transfers ownership of the home to you and offers you certain protections as the owner.

Keep reading to learn about what a warranty deed is, how one works, how it compares to other types of deeds and more.

What Is A Warranty Deed?

A warranty deed is a legal document stating who owns the property and if it comes with any outstanding liens or encumbrances. A warranty deed will typically state:

• The name of the rightful owner of the property
• That the property is free of any liens, judgments or encumbrances
• That no third parties can claim ownership of the property

The two parties involved in the warranty deed are the seller and the buyer, also known as the grantor and grantee, respectively.

How Does A Warranty Deed Work?

A warranty deed offers protection by creating a binding legal contract when ownership is transferred from one person to another during the closing process. In most cases, the lender will require a warranty deed to be signed before approving the loan for the property.

Once the home sale is complete, the seller can be held liable for the buyer’s losses if they don’t hold a clear title. This liability means that if an issue occurs when transferring property ownership, the buyer can charge or sue the seller because they broke the contract terms.

Types Of Warranty Deeds

There are two main types of warranty deeds: general warranty deeds and special warranty deeds. Each one offers a different level of protection to the buyer, so it’s important to understand which one you’re receiving when you buy a home.

General Warranty Deed

A general warranty deed is the most beneficial for the home buyer because it provides the greatest amount of protection. It’s a guarantee from the current owners (also referred to as the grantors) that they have full ownership of the property and have disclosed all encumbrances, liens, easements and judgments. These guarantees and disclosures mean that the buyers (or grantees) are fully aware of what they’re getting themselves into.

A general warranty deed will include the names of all involved parties, as well as a description of the property being transferred. Often, the parties will have to sign a warranty deed in the presence of a notary or witness before it’s legally binding.

A general warranty deed provides the highest level of protection to the grantees. That’s because, under a general warranty deed, the grantor is held responsible for any breach that occurs, even if it happened without their knowledge.

Special Warranty Deed

A special warranty deed is less beneficial to the home buyer. Unlike the general warranty deeds, which promise full ownership to the new buyer, the special warranty deed only guarantees no encumbrances of the property during the grantor’s ownership.

A special warranty deed doesn’t offer any protection against claims to the title prior to the grantor receiving the title. As a result, there could be a lien or encumbrance that dates back to before the grantor owned the home. And if that party makes a claim to the home, the grantee has no recourse against the grantor.

Special warranty deeds are commonly used in commercial real estate and by temporary owners, such as banks. As a home buyer, you would be unlikely to come across a special warranty deed in your typical home purchase.

Warranty Deeds Vs. Other Deed Types

A warranty deed is just one of the house deed types you may encounter in real estate. If you’re buying a home, it’s important to understand how each one works, as they all offer very different assurances and protections.

Ways To Get A Warranty Deed

A warranty deed is a standard document used in the sale of a home. In fact, they’re often required by lenders. The warranty deed is typically signed over by the seller at the closing. If you need a blank warranty deed to use for an upcoming transaction or want one created for you, there are a few ways to get one:

• Visit your local county recorder’s office: Counter recorder’s offices often have copies of various deed documents that anyone can download or pick up in person.
• Use your real estate agent: Because a warranty deed is a standard part of a real estate transaction, your real estate agent should have a copy of one.
• Download an online template: There are many deed templates available online for download. Try to find one specific to your state, as laws vary by location.
• Consult your real estate attorney: If you live in a state where a real estate attorney is required for a home sale, they can provide you with a warranty deed.

Warranty deeds can vary from state to state, so it’s a good idea to check with a local government office or a real estate attorney that’s licensed in your state. They can advise you on any deeds and special laws that exist in your area.

Warranty Deed FAQs

If you’re getting ready to buy or sell a home, it’s important to understand how warranty deeds work. Here are the answers to some commonly asked questions about warranty deeds:

If I’m offered a general warranty deed, do I need a title search?

Regardless of the deed, virtually all lenders will require a title search when you’re buying a home. During this step, an attorney or title company will search public records and legal records to determine who owns the property and whether there are any liens or judgments against it.

You can also see if the current owner owes property taxes and if there are any potential loans against the property. A title search will give you a complete picture of any potential problems with the property.

If the title search comes back clean, do I need title insurance?

Title insurance will pay for all costs arising from a title claim. But with a general warranty deed, the grantee would likely have to commence legal proceedings to enforce the deed’s warranty provisions.

This kind of legal action might be costly, and you might not get your costs reimbursed if the grantor is insolvent. For that reason, risk-averse buyers might prefer to couple a warranty deed with title insurance.

Does a warranty deed prove ownership?

A warranty deed doesn’t necessarily prove that the grantor is the legal ownership of a property, nor does it give you legal ownership if the grantor is not in fact the legal owner. For that reason, a warranty deed is typically paired with a title search to establish legal ownership.

What does a warranty deed look like?

A warranty deed is a legal document and appears as such. It will include the names and personal information of the grantor and grantee, as well as assurance that the property is free of liens, judgments and encumbrances.

How much does a warranty deed cost?

The cost of a warranty deed depends on where you live, as well as the type of property you’re buying. There may be separate costs, including one for having the document prepared and another as a recording fee. Generally, the cost can range anywhere from a few hundred dollars to a few thousand.

Are these the only types of deeds available?

Warranty deeds are most commonly used in home sales, but they aren’t the only kind. Other common types of property deeds include quitclaim deeds, special purpose deeds, and more. However, warranty deeds provide the most protection to buyers, so that’s the kind you want when you’re buying a home.

The Bottom Line

A warranty deed is one of the most important documents you’ll come across when you’re buying a home. After all, it transfers legal ownership of the home to you, as well as assures you that there are no liens or encumbrances on the title.

A warranty deed can give you the peace of mind that no one else can make a claim to your new home. And the good news is that if you learn about an unexpected lien, the grantor (meaning the seller) can be held liable.

If you’ve been thinking about new beginnings, get started. Complete a mortgage application online today and begin the search for your dream home.