When purchasing a home, it’s normal to wonder whether or not you’re getting a good deal. Will you need a residential service contract to help save on repairs for failing appliances? Or will there be some kind of appliance warranty transferred with the sale you can use? While these concerns are typical, some people have even more problematic issues, including who owns the property.

The history of warranty deeds 

Before the advent of warranty deeds, it was not uncommon for disputes to arise over the ownership and transfer of property. After all, real estate can be valuable and is often a hot-button subject for many. Since public records were scarce or incomplete back then, some people would attempt to sell properties and fake titles, ending in conflict over who owned a property.  

When warranty deeds existed, they helped resolve these issues and made things more transparent for buyers and sellers. Throughout this article, we will explain a warranty deed, review the different types of warranty deeds, and describe the vital role warranty deeds play in home ownership and real estate transfers.

Warranty deed: A short definition

What exactly is a warranty deed? 

Although a title is also necessary to prove ownership, in most cases, the warranty deed acknowledges that the title was verified and the property ownership has been transferred to the seller lawfully. 

Since the warranty deed absolves the buyer of disputes unknown to the buyer on the property, a warranty deed provides a considerable protection benefit to the buyer.  

The main components of a warranty deed

Though components might vary based on what state you live in, many warranty deeds guarantee legal clarity of the property title for the purchaser through the six following covenants: 

1. Covenant of seisin (seller warrants that they are the sole owner of the property) 
2. Covenant of the right to convey (seller warrants that they have the legal right to represent the property) 
3. Covenant against encumbrances (seller warrants that there are no undisclosed restrictions or encumbrances against the property, such as liens, judgments, or other limitations) 
4. Covenant of warranty title (if anyone claims an interest in the property, then the grantor will jump in and defend the legal claim ) 
5. Covenant of quiet enjoyment (seller warrants that the buyer will not be affected by a defect in title) 
6. Covenant of further assurances (seller warrants that the seller will protect a buyer from any problems with the title that may arise in the future) 

A warranty deed will also typically include words of conveyance (describing the transfer of ownership) and proof of consideration, which names the purchase price or explains how the property was gifted, meaning a quitclaim deed (another version of a warranty deed) is used.

How exactly does a warranty deed work?

In addition to the scenarios described above, a warranty deed may be required when buyers need mortgage or title insurance financing. Warranty deeds guarantee ownership for the buyer and all legal rights that come with it. 

They also guarantee that the property has no other claims, that the title would supersede any claims that could arise and that the seller will ensure the buyer's right to the title and property if anything arises.

Additionally, warranty deeds can even clear buyers from liability for unpaid code violations or HOA fees. If problems do occur, the warranty deed legally enables the buyer to sue the seller, who is made legally responsible for the transition of ownership. Much like home warranty protection, a warranty deed provides added peace of mind for the buyer.

Warranty deeds and title searches 

Although the warranty deed is typically signed after a title search is performed, investing in title insurance may be a wise extra guarantee for the buyer to invest. While a warranty guarantee protects the buyer from issues with the title, you can still run into problems with your property if the seller cannot compensate you for title issues. 

Investing in title insurance gives you extra protection on your purchase if an issue with the property arises. Considering the cost of property, it is typically wise to have this type of coverage.

The different types of warranty deeds

There are several types of warranty deeds that you should know about. Let's review them so you see the difference:  

General warranty deed

A general warranty deed, also known as a 'full warranty deed,' offers the highest level of buyer protection. It guarantees that the property is free from any liens or encumbrances, regardless of when they originated.  

The grantor of a general warranty deed would guarantee against any defects in the title, even if these defects were created before they owned the property. This protects the grantee by ensuring that the title they receive is clean.  

Specialty warranty deed 

A special warranty deed assures the real estate buyer that the seller owns the property and that the seller's property title has not faced legal challenges during his or her possession. The seller, however, makes no guarantees about any period before taking ownership. Additionally, a few lesser-used types of deeds are essential to understanding property transfer correctly. 

Statutory warranty deed

A statutory warranty deed is a short-form version of a warranty deed that makes the same legally enforceable guarantee as a general warranty deed. The grantor must compensate the grantee if a claim arises against the property. 

A statutory warranty deed differs from a warranty deed because it is a shorter form made available through your state's statutes and it may not outright list the promise that the title is guaranteed to be precise. Instead, this guarantee is implied and is still legally enforceable because it is a statutory form.  

Since these forms were developed to expedite the submitting and filing of warranty deeds, the forms can vary by state, so make sure you are familiar with the process in your state. For example, if you are in Florida or Georgia, these forms are identical in their general warranty deed protections. 

Joint tenancy warranty deed  

Typically associated with real estate, joint tenancy warranty deeds are used when two or more parties come together simultaneously to take ownership of a property. The most common example of this type of deed is for unmarried couples buying a property together.  

Since each party has a claim to the property, they also share the benefits. If they decide to rent out the home to another individual or if they sell the property, each party is entitled to a 50% share in the profits. But the relationship also means they are equally responsible for paying for the property, including mortgage payments, property taxes and maintenance. The other party must assume responsibility if one fails to meet the financial obligations. 

This type of warranty also creates rights of survivorship. If one party dies, the other joined party will take control of the property on the joint tenancy deed.

Other types of deeds

Deed-in-Lieu

Another type of special-purpose deed, known as a deed-in-lieu, is common in real estate transactions. When a mortgage borrower defaults on a mortgage, they may transfer ownership of the property back to the lender using a deed instead of foreclosure.  

This option benefits the borrower by sparing them the impact of a foreclosure on their credit history; it also benefits lenders by helping them avoid the more complex, expensive and time-consuming process of going through an actual foreclosure.  

This substitution also prevents homes from sitting empty, avoiding the increased risk of damage from vandals, looters and sqwwwters. 

Special purpose deed

As their name would suggest, special purpose deeds are deeds agreed upon by both parties for a special purpose. They only apply to specific types of sales or transactions and offer differing levels of protection.  

Examples include administrator deeds, personal representative deeds, sheriff's deeds and tax deeds. These types of deeds differ from warranty deeds in that they are used for specific sitwwwions that do not offer the same level of guarantee protection. 

Quitclaim deed

Like a warranty deed, a quitclaim deed (sometimes called a non-warranty deed or special-purpose deed) is a legal transfer of ownership that applies to a property, but this time with minimal legal protection for the buyer (or recipient) of said property.  

Unlike warranty deeds, quitclaims include neither legal warranties nor guarantees concerning the period that the seller owned the property and before that time. Property transfer-of-ownership scenarios often use a quitclaim, like divorces, inheritances, donations to trusts or businesses, or gifts between family members. In these sitwwwions, ownership is not in question or doubt, and quitclaims allow for a quick and easy renouncement of property claims (and liability) for those relinquishing them. Under quitclaims, the purchaser or recipient of the property in question is not protected if title issues arise, which is why a quitclaim would appeal to a seller who suspects there could be a title issue and wishes to avoid liability.  

A warranty deed offers buyers significantly more protection. Still, a quitclaim can be a quick and easy solution, particularly with trust among family members when a property with indisputable history changes hands. 

Are warranty deeds different in each state?

Like most things decided at the state level, the short answer to this question is yes. It does matter whether you are based in Florida, Georgie, Illinois, or any other state. 
 
Although some states have very similar forms, protections, and guarantees when it comes to warranty deeds, there can be slight differences that you should be aware of when buying property in different states. 

You can find sample versions of warranty deed forms online at websites like PublicLegal, a product of the Internet Legal Research Group (ILRG). However, because it is a legal document it will always be better to consult your own attorney.

How to obtain your warranty deed

Some buyers prefer professional help and request a real estate agent's assistance in obtaining a title search, title insurance and an official warranty deed. If you'd like to get your warranty deed without the help of a realtor or title search company, be sure to do your own public records research to determine definitively that the property you're interested in is free from all liens, encumbrances or other outstanding legal and financial claims.  

If you need help conducting your title search or determining the specifics of your state's property laws, a property law attorney can help. A mortgage lender can also tell you more about this process and what options you have when protecting your ownership of a new property you're considering buying.  

The information in this article is intended to provide guidance on the proper maintenance and care of systems and appliances in the home. Not all of the topics mentioned are covered by our home warranty or maintenance plans. Please review your home warranty contract carefully to understand your coverage.