What Is a Warranty Deed?

By The Law Office of Yoel Molina.
 
A warranty deed is likely something you desire if you are purchasing real estate from an unknown seller. It is a deed—a formal record that certifies ownership—plus the following promise: In the event that someone else turns out to have a claim on the property, the seller undertakes to defend the buyer.

A warranty deed functions similarly to a bumper-to-bumper warranty for automobile purchases when it comes to real estate transactions. A warranty deed ensures the buyer will own the property free and clear of debts, liabilities, and other claims, and the seller is accountable for anything that infringes on that right, much like a car warranty ensures the buyer that the car will function properly or the manufacturer will fix it.
 
What Is Covered by a Warranty Deed?
Imagine that you decide to purchase a store for your retail operation. The sale is finalized, but you later discover that the previous owner failed to pay property taxes, and the city now wants to seize the property to recover its unpaid debt. Or perhaps the deed lists four parking spaces, but the owner of a nearby business claims a prior owner granted that business permission to utilize some of the slots. Although these scenarios wouldn't prevent the transaction from happening, you might be held accountable for these debts and commitments. A warranty deed shields you from being forced to pay off debts, uphold obligations, or buy out unforeseen owners—even if the person who sold you the property was unaware of them.
 
When Would a Warranty Deed Be Needed?
A warranty deed is often required by mortgage companies if they are financing the property, but getting one is a good idea whenever you are purchasing a property from someone you don't know, regardless of the method of financing.

These documents shield you from debts and responsibilities owed not just by the sale but also by any previous owners or creditors. Another sort of deed, known as a special warranty deed, shields buyers from other claims made against the property, but only for the time that the seller held the property.
 
A Warranty Deed's Operation:
An investigation of all prior owners of the property, unpaid debts, unresolved court judgments, and other liabilities is done by a title company before a warranty deed is given. If issues are found, they can be fixed before the sale is finalized. Clearing the title is what the title company performs if they do not discover any issues. The sale can proceed and the deal can close if the title is clear.

Many times, sellers don't want to rely solely on a clear title, so they purchase title insurance to guard against any possible monetary damages. For additional security in case a seller declines to accept responsibility for a problem that later develops, buyers frequently get title insurance.
 
A warranty deed is created in what manner?
The seller, who is referred to as the grantor, drafts, and files a warranty deed. After being notarized, the grantor signs the deed and files it with the county recorder's office.

The following details ought to be in the deed:
-the date of the transaction; -
the names and mailing addresses of the buyer and seller
-the price being paid for the property
-a legal description of the property being sold, including the parcel number, which is often obtained from the original title if nothing has changed.
 
What Distinguishes a Warranty Deed from a Quitclaim Deed?
A quitclaim deed does not provide any warranties, in contrast to a warranty deed. It makes no guarantees regarding what is being transferred; it only transfers ownership of a property from one party to another. The grantee has no legal protection if any problems occur as a result of the transfer.

Due to the trust and assurance that any arising issues may be resolved amicably, quitclaim deeds are commonly used to transfer property among family members.

When quitclaim deeds are utilized, some instances are as follows:
- when a parent wishes to transfer property ownership to a trust for tax or estate planning reasons
- when a homeowner marries and wishes to include the spouse on the property deed
- after a divorce when the spouse who is keeping the property wishes to strike the other's name off the deed
- When an administrative error exists in the original deed, such as a missing signature or a misspelled name.

Quitclaim deed transfers are typically avoided when a mortgage is attached to the property. However, the person affecting the transfer, not the recipient of the property, would be responsible for paying the mortgage if one exists on the asset.
 

If you have any questions about this article or similar matters, please contact our office, the Law Office of Yoel Molina, P.A., at fd@molawoffice.com or 305-548-5020, option 1​