A special warranty deed is a legal written instrument that is used in order to transfer real property to another person, a grantee. It also guarantees that there are no defects in its title that occurred during the time that you owned said property. This isn’t saying that the property has a spotless title, just that you have not accrued defects during the time you have owned it.
A grantor (the original owner) is defending the title against any claims or demands associated with the title of this property. Ultimately these deeds are the best buyer protection ownership transfer document that exists as any title issues that exist from a prior owner are not their issue. Oftentimes this type of deed will be denied by a mortgage lender and will make closing on property difficult.
When to Use a Special Warranty Deed
Use this type of legal document when you are selling or buying property, are transferring property directly into a trust, you’re in the business of buying or selling property and/or you have to include warranties with the title of a property.
Special Warranty Deed vs Warranty Deed
A special warranty deed is one that promises that nothing has happened to property during the current seller’s (you) ownership. If you are the seller, you can remove yourself from issues that may occur down the road that you didn’t partake in. A special warranty deed is used to protect a seller while allowing the buyer to remain in the loop regarding potential issues. Generally a general warranty deed is used in residential property with a mortgage loan. However special warranty deeds are sometimes acceptable during commercial real estate transactions. Oftentimes trust, partnerships, LLCs or corporations use this type of written legal document.