A warranty deed is a statement of ownership of real property, and that the owner is the only person who legally may transfer the property to another person. It includes a statement that no other entities have claim or lien to the property.
This document can help in the event of contestation over boundaries on the property. The warranty deed identifies that the owner of the property is free and clear of encumbrances against the property, such as claims that the township owned part of the easement 100 years ago and can therefore build on the property without the owner’s consent.
Warranty deeds are most frequently used for home sales, as a guarantee to the buyer that the seller takes responsibility for any issues that challenge the buyer’s ownership of the property. Basically, a warranty deed covers the following:
- The grantor warrants that the grantee is the new, official owner of the property.
- The grantor states that the property is free of all encumbrances.
- The grantor warrants that they will defend the title so that the grantee (and possibly the grantee’s heirs) may enjoy peaceful ownership of the property, with the power to convey the property.
There are two types of warranty deeds: special and general. General warranty deeds convey the grantor’s interest and title in the property to the grantee, as well as state that if the title is somehow defective, the grantor takes responsibility or the grantee may hold the grantor liable. A special warranty deed states that the grantor has done nothing during the time they owned or held the property to impair the grantee’s title to the property. Special warranty deeds limit the liability of the grantor to only what the deed states, whereas a general warranty deed could cover more than the grantor intends or assumes.
When is a Warranty Deed Invalid?
Warranty deeds, unlike other types of deeds, do not need to be filed with the county records office to be considered legally binding; however, if the grantee contests an aspect of the property or the grantor contests ownership of the property, it is important to have a copy of the warranty deed on file as evidence in court.
The warranty deed is often included with sales documents, but is not a sales document in itself, nor is it an agreement of sale in the future. It is merely a legal statement of protection for the grantee who purchases the property, and in the case of specialty warranty deeds, limits the liability of the grantor in specific ways. The warranty deed may not be used in any other manner.
Elements of a Warranty Deed:
- The warranty deed must be written. There is no such thing as a verbal warranty deed.
- The deed must identify the two parties involved by name, and possibly by Social Security Number, or Business Identification Number.
- The property must be described clearly, including address, boundaries, and Plat Book reference number (filed at the county recorder’s office).
- Statement defining what the seller guarantees of the property to the buyer, and how long the guarantee is good for.
- Signed by both parties, a notary, and at least one witness (check your local laws).