If you’re in the process of purchasing a home, you will need to begin thinking about securing a warranty deed. This is an essential document that can help complete the property transfer process. It also guarantees you rights to your new home.
Here is everything you need to know about how it works:
What is a warranty deed?
A warranty deed is a legal document that provides property owners a significant amount of legal protection when they purchase a new home. This is because it certifies that the title to the property is free from any liens, other mortgages, or any other potential negative claims against it. Essentially, it means that the property is free from hindrances and ready to change hands.
A warranty deed will typically include the following things:
- A legal description of the property
- The name of the person transferring the property (aka the grantor)
- The name of the person taking ownership (aka the grantee)
- The details of the ownership transfer
When transferring ownership of a home or land, it is essential that both parties agree to the above inclusions. This way, things can proceed smoothly.
Warranty Deed Protections
A warranty deed ensures that the new owner of a property can be completely confident in his uncontested rights to his newly obtained real estate.
A good warranty deed should also always include the following promises, sometimes called covenants by those in the real estate industry.
Covenant of Seisin
Seisin is an Old French word that means possession. When a warranty deed includes this covenant, the deed grantor ensures that they own the property and have the legal right to sell it.
Covenant against Encumbrances
The deed grantor can use this as a promise that the property is free of any liens or encumbrances. The only exception would be if the deed explicitly addresses them.
Covenant of Quiet Enjoyment
This covenant guarantees that the buyer of the home is the official owner. It also guarantees that the title provided is official. This means that anyone else showing interest in the property will not have a valid claim on it.
Covenant of Further Assurance
This is a promise from the warranty grantor. It means that they will deliver any document or instrument necessary to ensure the title of the home is good. They will not hold anything back from the new owner.
Types of Warranty Deeds
There are two main types of warranty deeds.
There’s a general warranty deed, which has been discussed so far, and a special warranty deed.
The special warranty deed is not as comprehensive as the general warranty because it only guarantees these two things:
- The grantor ensures they have received the home’s title.
- The grantor ensures the property was not encumbered in any way while they owned the property.
Because of this, many homeowners choose to use a general warranty deed.
What is the difference between a warranty deed and a quitclaim deed?
Although some people might use the words interchangeably, these are two very different entities.
Remember, as discussed, a warranty deed guarantees that a home’s title is clear of any claims or encumbrances. The warranty deed also transfers the title from the seller to the buyer.
A quitclaim deed functions in a similar but not identical way. With a quitclaim deed, the seller of the property transfers the title, interest, or claim they have on a property to the buyer. However, it is not guaranteed that any of these claims are valid. Therefore, there is more trust involved in accepting a quitclaim deed.
How do you get a warranty deed?
If you follow most legal advice, then you would prefer to get a warranty deed for your property.
To do this, all you need to do is obtain a valid copy of the warranty deed template. You can usually get these at a local Realtor’s office. The next step is to sign the deed in front of a notary public with the grantor present as well.
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Then, you have to file the signed and notarized form with the local county office in charge of recording property documents.
Once you complete all of these steps, you need to remember one thing: A warranty deed can be revoked.
Usually, whoever signs the deed needs the cooperation of the receiver to revoke it successfully. If family members transferred the property to each other, then this should be no problem; however, in a typical sale, legal action must be taken to revoke the deed for any reason.
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