My real estate agent wrote an offer on a property for me and she told me we should ask for a “general warranty” deed. The seller of the property countered my offer on price and several other items, including changing the deed to a “special warranty” deed. My agent attempted to explain why the seller requested a different type of deed, but I have to admit it makes me nervous and I am still not quite sure what the difference is in a “special” and a “general” warranty deed. Can you please help me understand the difference and let me know if I have anything to worry about?
The different types of deeds are confusing to most buyers ... and sellers, too! Frankly, I am surprised there are not more “special” warranty deeds. Let’s start at the beginning. According to John Reilly, in “The Ultimate Language of Real Estate,” a deed is “a written instrument by which a property owner as ‘grantor’ conveys and transfers to a ‘grantee’ an ownership interest in real property.” There are actually over 15 different kinds of deeds used in our legal system. Most commonly, general and special warranty deeds are used in real estate transaction, although there are many others used on specific situations.
Now, a general warranty deed (sometimes referred to as just a warranty deed) is “a deed in which the grantor fully warrants good clear title to the premises ... covenant against encumbrances, covenant of warranty forever. ... A warranty deed warrants the title, not the quality of construction ... and offers the greatest protection of any deed.” Hence why your agent suggested you ask for the strongest, most encompassing deed for your protection in the title transfer.
A special warranty deed, in the words of John Reilly, is “a deed in which the grantor warrants or guarantees the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time.” This deed is obviously more restrictive and is safer for the seller to give.
Before you get too worried, if you are getting title insurance (which I highway recommend!), the title company will be warranting your property for all time, so you will be covered by them (with exceptions) from the beginning of the property’s existence. Talk with the title company and your attorney to understand thoroughly. The attorneys are actually why I said I am surprised there are not more special warranty deeds. Most attorneys recommend that you “give what you got,” i.e., if you got a special warranty deed, then they usually recommend you convey the property with a special warranty deed, so you are not giving coverage that you never received from the previous owner. The interesting circumstance is that most sellers (and many brokers) don’t remember, or bother to look up what deed they received when they bought the property. Chances are, if they bought from a developer, a bank sale, foreclosure or short sale, then they received a special warranty deed. They have the right to give a general warranty deed, and it seems they often do. I know of one older subdivision that gave every home a special warranty deed. I believe most every homeowner in that subdivision now has a general warranty deed because everyone forgot or never looked when they sold their homes. Strange but true! Best of luck to you!
Joan Harned is an owner and broker for Keller Williams Mountain Properties and heads up Team Black Bear, her own real estate team. Harned has been selling real estate in Eagle County for 27 years, is a past chairman of the Vail Board of Realtors, past Realtor of the Year, past director on the Great Outdoors Colorado Board and a member of the Luxury and Land Institutes. Contact Harned with your real estate questions at Joan@TeamBlackBear.com, 970-337-7777 or www.SkiAndTeeHomes.com.