The Special Warranty Deed
The Special Warranty Deed is a compromise deed. It guarantees clear title only during the time the real property was owned by the seller. It does not guarantee against any issues that may be present before the seller owned the property.
It is between a Quit Claim Deed and a Warranty Deed in guarantees. The Quit Claim Deed has no guarantees, while the Warranty Deed Guarantees the property is free and clear from the original owner until the time of sell.
General Purpose and Effects of the Special Warranty Deed
This deed transfers all of the owners interest to the buyer and guarantees against title problems from the time the owner purchased the property until the time of sell. It does not guarantee against problems that may have existed when the owner purchased the property.
When Are They Used
Government agencies and large companies often have a policy to issue this deed. Other sellers will also want to use one if they know of previous title problems. Attorney’s often advise their clients to use this deed.
How They Affect Real Estate Buyers
This deed transfer the sellers interest to the buyer and is usually a good transfer. However, if there are title problems before the seller owned the property the seller is not guaranteeing against these problems. The seller may not be aware of these problems.
How They Affect Real Estate Sellers
When using this deed the seller is accepting less legal liability that when using a Warranty Deed. This is definitely to the sellers advantage.
While there may not be previous title problems, the seller will not liable for any that do exist. If a seller insists on using this deed consider this a red flag of possible title problems. Also title companies may not insure the transaction unless a Warranty Deed is used.