A special warranty deed is a conveyance document used to transfer real estate ownership. The document provides the buyer (or “grantee”) with a warranty that the conveyed property is free of any issues that may have developed during the seller’s (or “grantor”) ownership. However, a conveyance executed under this type of deed does not warrant the title against issues made under any previous owners.
Also referred to as a:
- Grant Deed
- Limited Warranty Deed
- Covenant Deed
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
A special warranty deed is used to transfer a grantor’s interest in real estate to a grantee with a title warranty starting from the date the grantor acquired the property. The deed does not provide assurances regarding any other owners.
General and special warranty deeds are two of the most commonly used deeds in property transactions. Where they differ is in the timespan their warranties cover. In a special warranty deed, the grantee receives the grantor’s contractual promise that the property’s title was not encumbered for the entire duration they owned it. Whereas with a general warranty deed, the warranty applies to all previous owners, not just the current owner.
Special warranty deeds are common in situations where there is little to no information on previous owners, and the party selling the property does not want to put undue liability onto themselves by guaranteeing anything uncertain. The following list includes examples of situations where special warranty deeds are preferred:
- Foreclosures: When a property has been foreclosed, the new “owner” is the bank or lender that funded the home’s initial purchase. Said financial institutions will warrant there have been no liens, mortgages, or other issues for the short time they’ve owned the property, but are typically not willing to warrant anything prior.
- Commercial transactions: This includes any transaction where a company buys or sells commercially-zoned property. Due to the likelihood of the property changing hands more often, sellers are rarely willing to commit to any issues that could have occurred during the tenure of previous owners.
- Estate matters: Should an individual handling the death of a loved one be unable to uncover information on previous owners, they can use the special warranty deed to warrant that the property is free of encumbrances for the length of time it was owned by the decedent.