Deeds: Check the Warranty before You Sign (Or Accept) Your Next Deed
How closely did you review the deed you signed or received the last time you bought or sold real estate? There are several types of deeds, each with significant differences, which can be used to transfer an interest in real estate. Since one can only convey what one actually owns, it is important to look at what the person signing the deed (the “grantor”) promises about the interest in the property being conveyed. The scope of the interest that a seller or other grantor of real estate promises to convey is encapsulated in the type of deed given at closing on the transfer of title to the real estate. The scope of the warranty of title determines the type of deed.
The plainest form of deed is the quit claim deed, which is used to transfer whatever interest the grantor may hold in the real property. A quit claim deed does not contain any warranty of title, so the grantor in a quit claim deed makes no promises as to the quality of the grantor’s title to the property, or even that that the grantor has any title to the property. Rather, a quit claim deed simply transfers whatever title or interest the grantor had. Thus, unlike the warranty deeds discussed below, a quit claim deed may not result in a conveyance of the property itself. It only transfers whatever interest in the property the grantor had at the time the deed is executed.
A better form of deed, from the perspective of the party acquiring the real property (who is referred to in the deed as the “grantee”) is a warranty deed. There are two kinds of warranty deeds: special and general. Warranty deeds actually transfer the property itself, as opposed to a quitclaim deed, which simply transfers whatever interest in the property that the grantor may have had.
A special warranty deed contains a warranty from the grantor that it will defend the grantee against all claims to the title of the subject property which may be brought by the grantor or by anyone claiming by, through or under the grantor. Therefore, there is a limited warranty of title in a special warranty deed. You can identify a special warranty deed from the words “by, from or under them or any of them, shall and will” prior to “warrant and defend”, or the deed may state that the grantor will “warrant specially”.
A general warranty deed contains a much broader warranty because it is a promise by the grantor to defend the title against anyone and everyone who has a claim of title to the subject property. This broad warranty, and the general warranty deed itself, is created by omitting the words “by, from or under them or any of them” or by including a provision that states that the grantor will “generally warranty” the property.
Warranty deeds and quit claim deeds are the most common form of deeds used in real estate transactions. But there are others. The type of deed that a seller customarily gives varies regionally around the country. In many southern states, a buyer can usually expect to receive a general warranty deed, while in Pennsylvania the special warranty deed is the norm. When selling or buying real estate, it is important to understand what type of deed will be used, so take a careful look at the deed before you close your next real estate transaction.
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