How Does a Special Warranty Deed Work

The seller has several types of deeds, which he can prepare when he decides to sell his property and therefore, his right of ownership. A special warranty deed is one of those deeds, along with the bargain and sale deed, the general warranty deed, and the quit claim deed. This deed, one can say, is a slightly modified version of the general warranty deed.

As the definition will doubtlessly tell you, it is a deed in which the seller warrants or guarantees the title only against defects arising during the period of his or her tenure or ownership of the property. This could be against claims and demands made by him or her and all persons claiming by, through, and under him or her. The grantor does not warrant against any title defects that existed before he or she owned the property.

How it Works

In a general warranty deed, the seller or the grantor promises a set of six covenants. These covenants state that the seller is willing to defend the buyer from any problems related to a bad title to the property, that may have arisen any time since the property has come into existence. Now clearly, there is a dodgy bit of detail as to why the current seller should protect the buyer from a bad title which is not really his doing. If the previous resident and owner gave it a bad title, there is no reason for the grantor to defend it. This sort of arrangement is not realistic at all, more so when the property for sale is a pretty old one and has passed through several hands.

With the special warranty deed, the grantor assumes as much responsibility as he or she ideally should. The grantor promises to remove any encumbrances that may arise due to his ownership, or if he is responsible for a bad title. Such deeds only include the covenant of seisin, the covenant of the right to convey, and the covenant against encumbrances caused by the seller. The other covenants for title are not usually included.

In a way, this sort of deed is more favorable to the buyer than say the quit claim deed or the bargain and sale deed. Unlike the quit claim deed, this document provides a modicum of protection to the buyer. It gives the buyer a bit of security that if the present grantor has conducted some sort of business, all the buyer has to do is point the finger in the direction of the grantor and he will subsequently take care of everything.

Usually, such deeds are not accepted by the buyer when there is a mortgage on the property. They are most commonly employed in property transactions where the seller did not own or occupy the property for a significant period of time and also by executors and trustees.

The special warranty deed form, by way of certain covenants, does promise to save the buyer from any encumbrances that may arise on account of bad title, but restricts the liability only up to the present grantor. The bad title creation by previous owners still remains a matter which the buyer has to make do with.