Illinois Special Warranty Deed Form

What Is an Illinois Special Warranty Deed Form?

An Illinois special warranty deed form is a type of deed used to transfer property with a limited warranty of title. The current owner (the grantor) guarantees the new owner (the grantee) will receive good title to the property, but the guarantee extends only to the grantor’s ownership period.¹ Any title issues that arose before the current owner acquired the property are not covered by the warranty of title that a special warranty deed provides.

What Is Warranty of Title?

A warranty of title is a guarantee about a property’s title provided with some types of deeds. The warranty is given from the current owner to the new owner, and it protects the new owner against problems with the property’s title. The current owner who gives the warranty guarantees a good title and agrees to be legally responsible if a title problem emerges.

A complete warranty of title covers the property’s entire chain of title—protecting the new owner against all title problems not specifically excluded by the deed. The warranty of title given by a special warranty deed is limited because it covers issues from while the current owner held title (but not before).

A person who signs a special warranty deed promises:

• That the current owner owns the real estate being transferred;
• That the current owner is legally responsible for all problems with title that relate to the period when the current owner owned the property; and
• That the new owner will be able to enjoy and use the real estate in the future and will not be interrupted by the current owner or anyone with a claim derived from the current owner’s ownership.

Each of the above promises (or covenants) are legally binding on the prior owner who signed the special warranty deed. The new owner can sue the previous owner for breach of warranty if any of the covenants turn out to be untrue. If the previous owner did not actually hold good title when signing the deed but acquires good title later, that title automatically transfers to the new owner.

Other Names for an Illinois Special Warranty Deed Form

States differ in the names they use for deeds that provide a limited warranty of title. The name used in Illinois, special warranty deed, is the most common name nationally. Other states, like Ohio and Kansas, call it a limited warranty deed. A few states have more state-specific names:

• California uses the name grant deed.
• Michigan uses the name covenant deed.
• Alabama uses the name statutory warranty deed.

Although the names are different, the purpose of these deeds is essentially the same. In each case, the deed provides a limited warranty of title that covers potential title problems that relate to the grantor’s ownership of the property.

How Do Illinois Special Warranty Deed Forms Relate to Other Forms of Deeds?

When the current owner signs a special warranty deed transferring property to a new owner, the current owner effectively says, “I have done nothing that will cause any title problems. I make no promises about what anyone else did before I owned the property.” This means that the limited warranty of title provides no guarantees about previous owners in the chain of title.

An Illinois special warranty deed form differs from the other main Illinois deed forms: quitclaim deeds and warranty deeds. While a special warranty deed divides the risk of title problems between the parties, a quitclaim deed form and a warranty deed form place all risk on just one party.

Illinois Warranty Deed Form

An Illinois warranty deed form—also called a general warranty deed form—transfers real estate with a complete warranty of title. A warranty deed’s covenants of title extend throughout the property’s entire ownership history—including to all previous owners of the property.² The complete warranty places all title-related risk on the current owner who signs the deed. A special warranty deed form, by contrast, limits the current owner’s liability to the period when the current owner owned the property.

Illinois Quitclaim Deed Form

An Illinois quitclaim deed form transfers property with no warranty of title. The new owner receives whatever interest (if any) the transferor has the legal power to transfer.³ The transferor makes no guarantees about the status of the title or whether he or she actually owns the property. A quitclaim deed form places all risk on the new owner because the transferor is not legally responsible for any title problems that may arise.

Illinois Title Insurance and Special Warranty Deeds

Most modern real estate sales require title insurance, especially if a lender is involved. A title insurance policy covers financial loss caused by unknown problems with the property’s title.⁴ Title insurance supplements the protection that a warranty of title provides by ensuring a reliable source of compensation (the insurance company) if a title issue arises. A deed’s warranty becomes less significant when a real estate transaction involves purchase of a title insurance policy.

Illinois Special Warranty Deed Forms and Other Illinois Deeds Used in Estate Planning

The names of each type of deed discussed above—special warranty deed, warranty deed, and quitclaim deed—is based on the warranty of title the deed provides (or omits). The names used for Illinois estate-planning deeds are based on how the deed allows property to bypass probate. Illinois’ two most common types of estate-planning deeds are transfer-on-death deeds and life estate deeds.

Illinois TOD Deeds

An Illinois transfer-on-death (TOD) deed—technically called a TOD instrument—lets a property owner name another person (the beneficiary) who will automatically take title when the owner dies.⁵ The owner keeps all rights in the property—and the beneficiary receives no vested interest—while the owner is alive.⁶ This means the owner can amend or revoke the TOD instrument—or sell, transfer, or mortgage the property—without the beneficiary’s consent.⁷

Illinois Life Estate Deeds

An Illinois life estate deed avoids probate by dividing ownership into a lifetime interest (the life estate) and a future interest (called the remainder) that kicks in when the life estate ends (i.e., when the life estate holder dies). An owner can use a life estate deed to keep property for life and transfer it to the beneficiary outside probate at death. The downside is that the owner who records a life estate deed can no longer sell or transfer complete ownership unless the remainder beneficiary agrees to the transfer.⁸

Common Uses of Illinois Special Warranty Deed Forms

Special warranty deeds are the most common deed forms for sales of commercial and multi-unit residential real estate. They are less common for transfers of single-family residences—which more often involve general warranty deeds.

Businesses (like LLCs) that are transferring property often use special warranty deeds when they want to avoid the broader potential liability associated with a general warranty deed. A special warranty deed allows the business to limit its responsibility to the period during which the business held title to the property. The business avoids the risk of title issues that arose before the business acquired the property.

Another common context for special warranty deeds is when the person signing the deed is acting as a fiduciary—notably including a trustee signing for a living trust. A trustee is acting on behalf of the trust’s beneficiaries and may lack the authority or knowledge to accept legal responsibility for title issues outside the trustee’s direct knowledge.

Special warranty deeds are often a good pick when the owner is changing how property is titled but will retain effective control—such as a transfer to a trust or business controlled by the original owner. The deed’s limited warranty may help ensure continuity of title insurance coverage following the transfer.

How to Create an Illinois Special Warranty Deed

An Illinois special warranty deed form have the right language to create the limited warranty, satisfy Illinois’ general requirements for deeds, and accurately reflect the parties intended transfer terms.

Illinois real estate law provides a model form for special warranty deeds.¹⁰ A deed that uses the statutory language provides a limited warranty to the new owner, with the transferor’s covenants of title listed earlier in this article. Illinois law assumes that a deed that says the transferor “grants, bargains, and sells” the property to the new owner is a special warranty deed.¹¹

Along with the limited warranty language, an Illinois special warranty deed must contain all the essential elements for a valid, recordable deed. An Illinois deed must include (among other things):

• The parties’ names and address;
• A valid legal description of the property;
• A statement of consideration; and
• A return address and new tax address (often the same).

Illinois also has statutory formatting standards that all deeds must satisfy.¹² The formatting standards address issues like page size, font, and margins. A deed that is properly formatted and includes all required information must be signed and notarized before recording.¹³

It is important for the special warranty deed to use the correct language and meet all legal requirements. A deed that is carelessly prepared or designed for another state can have seemingly minor differences that result in rejection by the county recorder, transfer under unintended terms, or even costly legal fees to correct an error.

1. 765 ILCS 5/8.
2. 765 ILCS 5/9.
3. 765 ILCS 5/10.
4. 215 ILCS 155/3(1.5).
5. 755 ILCS 27/20.
6. 755 ILCS 27/60.
7. 755 ILCS 27/25.
8. First United Pres. Church v. Christenson, 64 Ill. 2d 491 (Ill. 1976).
9. 765 ILCS 1005/1; 1005/1c.
10. 765 ILCS 5/8(b).
11. 765 ILCS 5/8(b).
12. 55 ILCS 5/3-5018.
13. 765 ILCS 5/1; 5/35c.