Montana Special Warranty Deed Form

What Is a Montana Special Warranty Deed Form?

A Montana special warranty deed, also called a limited warranty deed, is a legal document used to transfer real estate ownership from one party (the grantor) to another party (the grantee). This type of deed provides a limited warranty of title. The grantor guarantees that they have not encumbered the property during their ownership period, but they do not make any guarantees about the condition of the title before they owned the property.¹

A special warranty deed offers a middle ground between a general warranty deed, which provides the broadest protection to the grantee, and a quitclaim deed, which provides no guarantees about the title at all. Special warranty deeds are popular for transfers where the grantor is willing to provide some assurances about the title, but lacks the knowledge or authority provide the extensive warranty that comes with a general warranty deed.

What Is Warranty of Title?

A warranty of title is a legal assurance provided by the grantor in a deed. In Montana, there are different levels of warranties of title depending on the type of deed being used for the property transfer. A grantor who provides a complete warranty of title guarantees a clear and valid title to the property and that there are no problems with the property’s title at any point in its ownership history.² The grantor agrees to take responsibility for title problems regardless of when a problem arose, and the new owner can sue the grantor for breach of warranty if a title problem is discovered after the transfer.

A Montana special warranty deed provides the new owner a warranty of title that is limited in scope. The grantor guarantees that he or she has not transferred the property to anyone else and has not done anything to cause any problems with the title—such as undisclosed liens, assessments, or outstanding taxes.³ The grantor is not responsible for any title issues that may have existed before the grantor acquired the property.

Other Names for a Montana Special Warranty Deed Form

The term special warranty deed distinguishes this deed type from a general warranty deed, which provides a complete warranty of title. Other states have different names for deeds that transfer property with a limited warranty of title, including:

• Limited warranty deed (for example, Kansas and Ohio);
• Grant deed (for example, California);
• Covenant deed (for example, Michigan); and
• Bargain and sale deed (for example, Nevada, New York, and Washington).

While the terminology may vary between states, the deed’s purpose is generally similar. It provides a limited warranty of title guaranteeing that the grantor has not encumbered the property during his or her ownership, but giving no guarantees about the property’s title before the grantor took title.

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

A Montana special warranty deed offers a level of protection that lies between the protections offered by a general warranty deed and a quitclaim deed.

• Montana general warranty deed form. A Montana general warranty deed form offers the broadest protection to the grantee. The grantor guarantees that the title is free from all defects and encumbrances, whether they occurred during or before the grantor’s ownership. The grantor also agrees to defend the title against any claims that may arise from a previous owner. A warranty deed places all risks associated with potential title problems on the grantor making the transfer.
• Montana quitclaim deed form. A Montana quitclaim deed form provides no warranty of title. The grantor transfers whatever interest they may have in the property, without making any guarantees about the condition of the title or the grantor’s legal right to transfer the property. The grantee assumes all risks associated with potential title defects when accepting a quitclaim deed.⁴

A Montana special warranty deed offers a middle ground between the general warranty deed and the quitclaim deed. It provides some guarantees about the property’s title, but the guarantees are not as extensive as those provided in a general warranty deed.

Montana Title Insurance and Special Warranty Deeds

Title insurance protects against financial loss due to defects in a property’s title.⁵ A title insurance policy is typically purchased during the property transfer process to safeguard the grantee’s interest against any issues that may not have been discovered during the title search. If a title problem is later discovered, the insurance company resolves the issue or compensates the owner for any financial loss the problem causes.

Title insurance covers many of the same issues as a warranty of title, including:

• Liens and encumbrances that were not discovered during the title search;
• Errors or omissions in the public records;
• Fraudulent or forged documents in the property’s chain of title; and
• An earlier owner’s undisclosed heirs who may have an interest in the property.

Title insurance is a good supplement to the protection provided under a Montana special warranty deed. A title policy can provide the grantee additional protection that extends to potential title defects that may not be covered by the special warranty deed’s limited warranty. Title insurance also ensures that there is a reliable source of payment in case the grantor is unable to compensate the grantee for the loss caused by a title problem.

Montana Special Warranty Deed Forms and Estate Planning Deeds

In Montana, life estate deeds and transfer-on-death deeds may be used for estate planning purposes like avoiding probate.

• Montana life estate deed. A life estate deed is a legal document that grants an individual (the life tenant) the right to use and occupy a property for the duration of their life. The property automatically transfers to one or more remainder beneficiaries upon the life tenant’s death. A life estate deed is not revocable, and the life tenant’s right to sell or mortgage the property is limited by the remainder beneficiary’s interest.⁶
• Montana transfer-on-death deed (TOD deed). A Montana transfer-on-death deed allows the property owner to designate a beneficiary who will inherit the property upon the owner’s death without the need for probate. The deed is revocable during the owner’s lifetime.

Common Uses of Montana Special Warranty Deed Forms

A special warranty deed in Montana is commonly used when the grantor is willing to provide some assurances about the title but does not want to provide extensive guarantees. Some common scenarios where a special warranty deed may be used include:

• Sale of commercial properties. In commercial transactions, parties may prefer a special warranty deed to limit the grantor’s liability for potential title defects that occurred before their ownership.
• Sale of properties with a short ownership period. If the grantor has owned the property for a relatively short time, they may prefer to use a special warranty deed, as they might not have a comprehensive knowledge of the property’s title history.
• Transactions involving banks or financial institutions. When a bank or financial institution sells a foreclosed property, they often use a special warranty deed to limit their liability, as they typically do not have complete information on the property’s title history.

How to Create a Montana Special Warranty Deed

As with any deed, a Montana special warranty deed should be customized to reflect the specific terms and conditions of the transaction. Reliance on fill-in-the-blank forms can lead to invalid documents and future title issues.

The special warranty deed must meet Montana’s deed requirements and have all necessary information—such as the names of the grantor and grantee, the legal description of the property, and the specific language for the limited warranty of title. The grantor must sign the deed in the presence of a notary public, who will acknowledge the deed. In Montana, the grantee’s signature is not required on the deed.

The signed and notarized special warranty deed is filed with the county clerk and recorder’s office in the county where the property is located. Recording the deed provides public notice of the property transfer and helps protect the grantee’s interest in the property.

1. Mont. Code § 70-20-304.
2. Mont. Code § 30-11-109.
3. Mont. Code § 70-20-304.
4. Blaine Bank of Montana v. Haugen, 816 P.2d 447 (Mont. 1991).
5. Mont. Code § 33-25-105(12).
6. Mont. Code § 70-20-313.