What is a Special Warranty Deed?
A Special Warranty Deed is a legal document that transfers ownership of real property from one party to another. Unlike a General Warranty Deed, which provides the grantee with the same protections as the grantor had against all prior claims, a Special Warranty Deed only guarantees that the grantor has no knowledge of any claims or encumbrances against the property that were created or existed during the grantor’s ownership. This makes it a less comprehensive form of warranty, but it also comes with a lower price tag and fewer legal obligations for the grantor. In this article, we will explore the key aspects of a Special Warranty Deed, its benefits, and when it might be the right choice for transferring property.
Understanding the Special Warranty Deed
A Special Warranty Deed is a type of deed that contains a limited warranty from the grantor. It is often used in transactions where the grantor is not willing or able to provide the full extent of warranties that a General Warranty Deed offers. The key difference between a Special Warranty Deed and a General Warranty Deed lies in the scope of the warranty provided.
Under a Special Warranty Deed, the grantor warrants that:
1. The grantor has good title to the property.
2. The grantor has the right to convey the property.
3. The grantor has no knowledge of any claims or encumbrances against the property that were created or existed during the grantor’s ownership.
This means that if there are any claims or encumbrances that the grantor was unaware of, the grantee is not protected under the Special Warranty Deed. However, if the grantor had knowledge of such claims or encumbrances, they would be required to disclose them to the grantee.
Benefits of a Special Warranty Deed
The primary benefit of a Special Warranty Deed is its lower cost and reduced legal obligations for the grantor. Since the warranty is limited to the grantor’s knowledge, it is less likely to result in costly legal disputes or claims against the grantor. This can be particularly appealing in transactions where the grantor is not willing to assume the full risk of a General Warranty Deed.
Another benefit of a Special Warranty Deed is its flexibility. It can be used in a variety of situations, such as when a grantor is transferring property to a family member or when the grantor is selling a property that has been in the family for generations. In these cases, the grantor may not want to assume the full extent of warranties, but still wants to provide some level of protection to the grantee.
When to Use a Special Warranty Deed
A Special Warranty Deed is most appropriate in the following situations:
1. When the grantor does not want to assume the full risk of a General Warranty Deed.
2. When the grantor is transferring property to a family member or a trusted friend.
3. When the grantor is selling a property that has been in the family for generations and does not want to be responsible for any claims or encumbrances that may have arisen before their ownership.
It is important to note that while a Special Warranty Deed provides some level of protection for the grantee, it is still a less comprehensive form of warranty compared to a General Warranty Deed. Therefore, it is crucial for both the grantor and the grantee to carefully consider their options and seek legal advice if necessary.
In conclusion, a Special Warranty Deed is a valuable legal tool for transferring property with limited warranty obligations. By understanding its benefits and limitations, both grantors and grantees can make informed decisions about their property transactions.
