Warranty deed: What it is, and how it protects home buyers

A warranty deed is a real estate document that transfers property from the seller to the buyer. With a general warranty deed, the seller guarantees a clear title and agrees to defend you against any lawful title claims – even if they happened before they owned the home. Because no single document catches every issue, buyers typically pair a warranty deed with a title search and title insurance.

Key takeaways:

• A warranty deed is a legal document that transfers ownership from the seller to the buyer and guarantees a clear title.
• The names of the parties in the transaction, the specific location of the property being transferred, and the warranties the seller is offering must be clearly defined in the document and notarized.
• A warranty deed is one of several types of deeds common to real estate transactions.

What is a warranty deed on a house?

A warranty deed is a legal document that transfers real estate from a seller to a buyer. The seller is known as the grantor, and the buyer is known as the grantee.

A warranty deed confirms that the grantor has the legal right to transfer the property to the grantee.

With a general warranty deed, the seller discloses all known encumbrances, including easements, liens, and judgments.

Even if properly signed and recorded, a warranty deed by itself does not guarantee that every issue with a title has been discovered and addressed. That’s why buyers usually order a title search and buy owners title insurance in addition to receiving the deed.

A warranty deed also gives a buyer the right to seek relief from the seller if there’s a legitimate legal claim against the home’s title that’s not disclosed in the warranty deed.

What does a warranty deed include?

To be valid, a warranty deed must identify the parties involved, the property being transferred, and the warranties being made. The exact requirements vary by state and county, but generally include the following.

Names of the grantor and grantee

A valid warranty deed includes the exact legal name of the grantor and the grantee. This must be exact. Any misspellings could cause confusion later, especially when the buyer refinances or sells the property.

The deed also could include details on how the grantee will hold title. For example, this may include a married couple or business partners who will be joint tenants, tenants in common, or another legal form of ownership interest.

Legal description of the property

While a street address is usually needed, it’s generally not enough to satisfy the description of real estate. Depending on the area, the property description may include lot and block numbers, legal boundaries and dimensions, and more. The point is to accurately identify the specific property beyond doubt or confusion.

Signatures, notarization, and recording

In almost every state, the seller must sign the deed and have it notarized. Some states also may require witnesses or additional forms. After the deed is signed, it’s typically registered with the county recorder or registrar of deeds.

5 common types of deeds

While a warranty deed is the most common type of deed, there are other types of deeds, each of which is used in specific situations.

1. General warranty deed

A general warranty deed is the gold standard of property transfers, offering buyers the greatest possible protection from future claims against the title. It protects the buyer from any title defects that have occurred over the entire history of the property.

Imagine a previous owner of a property you bought was fined for code violations or failed to pay homeowners association (HOA) fees. With a warranty deed, you won't be responsible for paying these liabilities.

This type of deed is overwhelmingly used in residential purchases, and most mortgage lenders require a general warranty deed for properties they finance.

2. Special warranty deed

A special warranty deed offers less protection than a general warranty deed. It guarantees there has been no encumbrance on the property during the grantor's ownership of the property. It doesn't cover anything that happened before the current owner bought it. In this case, any issues from before their ownership could fall to the new owner to resolve.

3. Quitclaim deed

A quitclaim deed is used for transactions in which one owner is transferring their claim to a beneficiary, often another owner.

A quitclaim deed is common in cases of divorce, inheritance, or the transfer of ownership of a business or trust. In a divorce situation, the spouse who leaves the marital home with no future financial involvement must sign a quitclaim deed to avoid future liability.

The quitclaim deed does not create any warranties or guarantees. It doesn't even constitute proof that the grantor ever had a valid claim to the property. It merely transfers whatever interest the grantor might have.

4. Deed-in-lieu of foreclosure

A deed-in-lieu of foreclosure is a document that voluntarily transfers legal ownership of a home to the lender to satisfy the mortgage debt.

This is used when the owner may have a mortgage default and is in danger of foreclosure.

It allows the owner to walk away from the home without debt and without a foreclosure on their credit. The lender receives ownership of the property, which it can sell to recoup its losses.

A deed-in-lieu is valuable to lenders because foreclosing on a home requires expensive legal fees and takes a long time.

Though you avoid going through a foreclosure if you are granted this option, the consequences are still very serious. Borrowers who are facing difficulty paying their mortgage should contact their mortgage servicing company to discuss possible options.

5. Special-purpose deed

Special-purpose deeds are used to transfer property ownership in specific, sometimes court-ordered, circumstances. They usually offer limited or no warranties on the title. A deed in lieu of foreclosure is a special-purpose deed that is commonly used in residential real estate transactions.

Other types of special-purpose deeds include an executor’s deed, which can be used by an executor to sell a deceased person’s property. A tax deed issued by a government agency when a property is sold to satisfy unpaid property taxes is another example of a special-purpose deed.

Warranty deed vs. title deed vs. title insurance

The terms house deed, title, and title insurance are often used interchangeably, but they have distinct meanings and roles.

Warranty deed vs. title deed

Comparing deeds vs. titles can be understandably confusing. A deed is a legal written document that is used to transfer ownership interest in a property from one party to another. A title refers to the legal ownership rights associated with the property.

A warranty deed is a specific type of deed that transfers ownership and includes promises by the seller about the legitimacy and quality of the title.

Warranty deed vs. title insurance

The difference between a warranty deed and title insurance is an important one. It comes down to two different forms of protection.

A warranty deed includes legal promises from the seller. These promises cover any issues that might arise, giving the buyer a legal claim against the seller if an unexpected claim arises.

Title insurance protects the buyer against losses if title problems occur, such as recording errors, undisclosed heirs, forged documents, liens, or ownership disputes.

The warranty deed’s protections depend on the seller’s promises, or warranties, and their ability to stand by them. So, for instance, even if the buyer has a valid claim against the seller, if they can’t be located or don’t have the resources to pay, the buyer could still lose.

How do I get a warranty deed?

If you're selling your home, you can get help preparing ga warranty deed from your real estate agent, attorney, or title company.

As you’re closing on a house, the attorney for the seller or the title company will usually draft the warranty deed. It’s registered with the county recorder’s office where the property is located once it is notarized and signed by the seller.

Here are the general steps to getting a warranty deed.

1. Seller’s attorney or title company drafts a warranty deed.
2. You and your agent receive and approve it.
3. You and the seller sign it and get it notarized.
4. The deed is registered with the county recorder’s office.

FAQ

Here are answers to common questions about warranty deeds.

What is the main purpose of a warranty deed?

The main function of a warranty deed is to transfer real estate and give the buyer assurances about the title. Through a general warranty deed, the seller promises that they own the property and can transfer it, as well as making a promise to defend the buyer against certain claims on the title, if they arise.

Does a warranty deed give you ownership?

Yes, a properly executed warranty deed transfers the grantor’s ownership interest to the grantee. But issues could still arise, such as third parties claiming an interest in the property or errors in the document itself.

Can you sell a house with a warranty deed?

Yes, as long as you have a valid title and the legal authority to complete the transfer.

What's the difference between a warranty deed and a title deed?

A warranty deed is a specific legal instrument to transfer real estate and includes promises from the seller to the buyer about their ability to do so.

A title is an informal term to refer to a deed showing ownership, not one specific legal document. There are many types of deeds.

What is the difference between a warranty deed and title insurance?

A warranty deed includes promises from the seller to the buyer. If issues come up that challenge those promises, the buyer may have a claim against the seller. But if the seller can’t be found or can’t pay, those claims might not get resolved.

Title insurance, on the other hand, is insurance that a buyer purchases from an independent insurer. It will cover any losses, as long as they are covered by the policy. This is why buyers usually want both.

How does a general warranty deed protect grantees?

The guarantees and disclosures in a general warranty deed mean the new owner can hold the former owner responsible for any title defect. If a third party files a claim against your title, you could sue the former owners. If your claim is successful, the grantors must cover any liability you incurred, along with your costs.

Do I need a title search and a general warranty deed?

Yes, in addition to receiving a warranty deed, your lender will probably require you to get a property title search to ensure there are no issues or errors. It's common to verify that the general warranty deed is accurate by also conducting a title search. Remember, the house is the security for the mortgage loan. If the house is lost or substantially devalued, the collateral is compromised.

Even if you get a general warranty deed from the seller, you may still need title insurance to fully protect your interests and cover a broader range of potential ownership claims. Your real estate agent or attorney can offer the best advice.

The bottom line: A general warranty deed offers important benefits

A general warranty deed protects you from title claims and is a critical safeguard when buying a home. It assures the buyer that the seller has the legal right to sell the home and confirms the property has no title conflicts. As a buyer, when you get a general warranty deed, you know your ownership rights are protected and that the title history of the property has been verified. For full protection, however, you’ll want to have a title search done and buy title insurance.

If you’re ready to buy a home, you can explore borrowing options by starting an application today with Rocket Mortgage.