A special warranty deed—also known as a limited warranty deed—is a variation of the general warranty deed. The general warranty deed is the most common and preferred type of instrument used to transfer real estate titles in the United States.
Both deeds provide the same general protections for the buyer. However, the primary difference between a special warranty and a general warranty deed is how they deal with the timeframe of protection given to title ownership. While the use of the word "special" may communicate to a buyer the idea that the deed is of higher quality, the special warranty deed is less comprehensive and offers less protection due to the limited timeframe it covers.
In residential property, special warranty deeds are frequently used in foreclosures and the forced sale of the property to satisfy a debt. A general warranty deed covers the property's entire history.
It guarantees the property is free-and-clear from defects or encumbrances, no matter when they happened or under whose ownership. The general warranty deed assures the buyer they are obtaining full rights of ownership without valid potential legal issues with the title. With a special warranty deed, the guarantee covers only the period when the seller held title to the property.
Special warranty deeds do not protect against any mistakes in a free-and-clear title that may exist before the seller's ownership. The grantee assumes responsibility for any problems that arise from the previous owners. As an example, imagine a home has had two previous owners before you. The first owner was a hoarder, and soon the home and yard fell into disrepair.
General vs. Special Warranty Deed: Avoid Unpleasant Surprises
The city's code enforcement department issued fines against the owner which attached to the property. The owner fell behind on their mortgage and the bank foreclosed, selling the home to the second owner.
To the pleasure of the neighborhood, the new owner fixed the house and cleaned the yard. After 10 years they put the home on the market, and you buy it using a special warranty deed. A few years later you decide to sell the home. However, because the code enforcement liens remain against the property, they could encumber your sell. At the very least, you will need to satisfy the city's lien to free the title.
Most times a title search will uncover any liens or claims to the title of a property. A title search is a review of available public records to determine the ownership of property.
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There are many ways to accomplish a property transfer, but two of the most common ways to transfer property in a divorce are through an interspousal transfer deed or quit claim deed. An "interspousal transfer deed" transfers title ownership between a married couple. A gift given by one spouse to the other during the marriage is considered "separate" owned separately , not "marital" mutually-owned property. This is important because through a deed, marital property can become separate property or vice versa, which is an important distinction in a divorce.
An interspousal transfer deed can be useful when one spouse has poor credit, and the couple wants to refinance their home. To receive a better mortgage interest rate, the couple may decide to use an interspousal transfer deed to transfer title to their home to the spouse with better credit.
Some other examples of circumstances where a couple might use an interspousal transfer deed include the following:. A "quit claim deed" transfers whatever interest one spouse has in property to the other spouse. An important difference between an interspousal transfer deed and a quit claim deed is that a quit claim comes with no guarantees or promises about property ownership. Some examples of circumstances where a couple might use a quit claim deed include:. Interspousal transfer deeds can be used to avoid tax liability when transferring property.
When title to property is transferred, the county may impose a transfer tax and may reassess the value of the property which could result in higher property taxes.
Lawyers for Deeds
However, an interspousal transfer deed is a special kind of transfer that is exempt from transfer taxes and ultimately a cost-effective method of transferring property between spouses. Quit claim deeds are very simple and use a form that is easy to find online or at office supply stores. The auctioning body is usually the local government, which claims no interest to the property whatsoever, but is selling only to recover the unpaid taxes without extending any warranty for the property title. The purchaser then may need to initiate a quiet title action to remove any clouds to the title.
In many jurisdictions, quitclaim deeds are rarely used to transfer property from seller to buyer in a traditional property sale: the grantor and grantee have an existing relationship, or the grantor and grantee are the same person. Execution of a quitclaim deed is relatively simple, and requires little more than both parties signing the deed and, if required in the state where it is executed, having the deed notarized, acknowledged before a notary or with a jurat signed before a notary. From Wikipedia, the free encyclopedia. This section is empty. You can help by adding to it. August Bargain and sale deed Estoppel by deed Harper v.
Paradise Warranty deed Property law. Retrieved 12 February Investopedia, LLC.
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