What is a 'Special Warranty Deed'
A special warranty deed is a real estate deed by which the seller only warrants or guarantees the title against defects in clear title that may have arisen during the period of its tenure or ownership of the property. The grantor of a special warranty deed does not provide a warranty or guarantee against any defects in clear title that existed prior to its ownership. A special warranty deed is an exception to the more commonly issued general warranty deed.
BREAKING DOWN 'Special Warranty Deed'Although the use of the word "special" in the name of a warranty deed may convey to a real estate buyer the idea the deed is of higher quality, this is misleading since a special warranty deed is actually of lower quality, offering less protection against possible defects in clear title than a general warranty deed.
The Differences Between General and Special Warranty Deeds
Ownership of, or title to, real estate property, whether commercial or residential, is traditionally transferred with certain guarantees made by the seller that the title to the property is being transferred free and clear of any ownership claims or other encumbrances by individuals or entities other than the seller.
A general warranty deed is the common, or standard, type of deed used to transfer real estate property in the United States. A general warranty deed guarantees to the buyer the title to the property is free and clear from any defects or encumbrances. This assures the buyer he is obtaining full rights of ownership and there are no valid potential legal issues with the title.
Both general and special warranty deeds provide a warranty that the seller owns the title and is free to sell the property; the property is free of any debt or other encumbrances specifically noted in the deed; and the seller is responsible for any defects in title.
The difference with a special warranty deed is the warranty granted regarding the title only covers the time period during which the seller held title to the property. The special warranty deed does not provide a guarantee against any defects in a free and clear title that may have existed prior to the seller's ownership of the property. Thus, the grantor of a special warranty deed is only liable for any debts or other encumbrances to the title which he caused, or which accrued during his ownership of the property.
Special warranty deeds are more commonly used in the sale of commercial property, while general warranty deeds are traditionally conveyed in the sale of residential property such as a single family home.