It is important to know that the five covenants of title that a seller gives in a General Warranty Deed are given not only on the behalf of the seller, but the seller is also giving the five title covenants on the behalf of all prior owners of the property since the beginning of time.
The Covenant of General Warranty. The general warranty deed assures the buyer they are obtaining full rights of ownership without valid potential legal issues with the title. Understanding deed warranties will help you to better protect yourself from Special and Limited Warranty Deeds that really aren't that special, and from the deeds that contain no protection at all. Get your attorney involved in the transaction before you sign a contract.
Another example of the warranty paragraph in a Special Warranty Deed, which is a variation of the paragraph from the Statutory Warranty Deed, is as follows:. Such lawsuits are not as common anymore since the providing of title insurance at the closing on the sale of property has become predominate.
Therefore, if a prior owner breached one of the five title covenants, creating a current title defect, the current seller is responsible for correcting the defect, even though the seller had nothing to do with the breach of the covenant. Consequently, the Limited Warranty Deed from Sam does not cover the unpaid 2008 taxes, and Sam Seller would not be liable to you for the unpaid taxes.
Special Warranty Deeds are typically given by sellers of commercial property, and these Special Warranty Deeds will also typically have exceptions to the five title covenants for known matters that are in conflict with one or more of the covenants. This covenant is an assertion by the seller that there are no undisclosed or nonvisible encumbrances against the property being conveyed.
These properties might have convoluted and extensive ownership chains, so it's more likely that special warranty deeds will be used in these situations. Photo Credits signing a contract image by William Berry from Fotolia.
In fact, these difficulties and their costs are the reasons for the creation of title insurance and its current predominance. The General Warranty Deed is the most common deed used in the sale of residential properties. Variations Upon The Preceding Deeds. Unfortunately, Sam Seller did not own the property when the 2008 taxes became a lien on the property and in January 2009 when they became past due.
There are different types of deeds that vary according to what the grantor can convey, what the grantor wants to convey, and what warranties that the grantor can or wants to include in the deed. Commercial property will more commonly use special warranty deeds. This covenant is an assertion by the seller that the seller has the right to convey the property, i.
An encumbrance could be a simple even beneficial easement that allows the power company to install a power line across the property to serve the building on the property or to continue running the utility lines to other downstream users; or it could be a multi-million dollar judgment lien against the property; or it could be just about anything else you might imagine that impacts usually negatively the use or value of the property including restrictive sometimes called "protective" covenants that control how the real estate may be used.
She didn't personally take any action or fail to take an action that would affect title, and no one else did either—at least during her period of ownership. Real Estate Basics. Like Warranty Deeds, the Special Warranty Deed conveys fee simple title and has the same five covenants of title. Instead, often only the following statement is in their place: