Nebraska Special Warranty Deed Form

What Is a Nebraska Special Warranty Deed Form?

A Nebraska special warranty deed is a type of deed that transfers real estate from the current owner (the grantor) to the new owner (the grantee) with limited warranty of title. The current owner promises the new owner that the current owner did not do or fail to do anything that could lead to problems with the property’s title.¹

A special warranty deed partly protects the new owner against title defects—which are problems with a property’s title that reduce its value or marketability. Title defects can include liens, mortgages, lack of a legal right to physically access the property, or an unclear chain of title.² A special warranty deed’s warranty covers some title defects, but not others—depending on when a defect arose.

What Is Warranty of Title?

Warranty of title is a guarantee from the current owner who signs a deed to the new owner who takes title under the deed. The warranty consists of a series of promises—which Nebraska law calls covenants for title³—about the quality and status of the ownership rights transferred under the deed.

A Nebraska deed that provides complete warranty of title typically includes five covenants.⁴

1. The current owner holds good title to the real estate (the covenant of seisin);
2. The current owner has the legal power to transfer the real estate (the covenant of right to convey);
3. The real estate is not subject to undisclosed liens or other title defects (the covenant of freedom from encumbrances);
4. The new owner will enjoy undisturbed possession of the real estate (the covenant of quiet enjoyment);
5. The current owner will defend the transferred title against lawful claims of third parties (the covenant of warranty).

If a title defect arises, the new owner can pursue a breach-of-warranty lawsuit against the prior owner to get back the financial losses caused by the defect.⁵

Why Is a Nebraska Special Warranty Deed’s Warranty Limited?

Nebraska special warranty deeds provide incomplete—or limited—warranty of title. The current owner guarantees a good title, but the guarantee covers only the time while the current owner held title. The current owner promises to defend the transferred title, but this promise covers only lawful claims “by, through, or under the [current owner].”⁶ In other words, a special warranty deed protects the new owner against title defects that arose while the current owner owned the property. Defects rooted earlier in the property’s chain of title are outside the warranty’s scope.

A Nebraska special warranty deed’s limited warranty is based on language in the deed itself. The precise warranty terms and any exclusions can vary between deeds.

Other Names for a Nebraska Special Warranty Deed Form

Special warranty deed is the generally accepted term under Nebraska law for a deed that provides limited warranty of title.⁷ Special warranty deed is also the most common term nationally.

Different terms for special warranty deed used in other states include:

• Limited warranty deed. Some states prefer the synonym limited warranty deed—which Nebraska courts rarely use.⁸
• Grant deed.⁹
• Covenant deed.¹⁰
• Grant, bargain, and sale deed (specific to Nevada).¹¹
• Statutory warranty deed. Lawyers in some states use the terms statutory warranty deed and special warranty deed as meaning the same. A statutory warranty deed includes an implied warranty based on language recommended in the law that defines it. Nebraska’s real estate laws do not provide suggested language for special warranty deeds. So, statutory warranty deed is not the right term in Nebraska.

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

The feature that separates special warranty deeds from other Nebraska deed forms is that special warranty deeds split the risk of title problems between the current owner and the new owner. A defect caused by an event that occurred while the current owner held title is the current owner’s responsibility. A defect from before the current owner’s ownership period is the new owner’s problem.

Other primary Nebraska deed forms for transferring real estate to a new owner are warranty deeds and quitclaim deeds. These place all risk on either the current owner or the new owner.

• Nebraska warranty deed form. A Nebraska warranty deed is sometimes called a general warranty deed. It gives the new owner complete warranty of title and puts all risk on the current owner. The current owner guarantees that no title defects affect the property—“no matter how, when, or by whom they may arise.”¹² A property owner who finds title problems after accepting a warranty deed can get a breach-of-warranty payment from the former owner who signed the deed.¹³
• Nebraska quitclaim deed form. A Nebraska quitclaim deed places all risk of title problems on the new owner. A property owner who signs a quitclaim deed makes no promises about the quality of the transferred title. The deed transfers whatever ownership rights the current owner can legally transfer—if any—with no warranty.¹⁴ Unknown defects are the new owner’s sole responsibility—unless a title insurance policy is in place.

Nebraska Title Insurance and Special Warranty Deeds

A property owner who signs a special warranty deed and the new owner who receives the property both run the risk of finding unknown title defects. Title insurance can reduce both parties’ risk.

Title insurance is a contract that shifts the financial risk of title problems to an insurance company. The insurer charges an up-front cost. In return, it promises to pay an insured person for financial damage caused by title defects that existed when the policy was issued.¹⁵

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

Nebraska law honors several other specialized deed forms named for their purposes and not defined by the warranty of title involved. Nebraska TOD deeds and life estate deeds are the specialized forms most often used for estate planning.

• Nebraska TOD deeds. A transfer-on-death deed—commonly called a TOD deed or beneficiary deed—names a beneficiary to take title to real estate when the owner dies.¹⁶ TOD deeds can be undone and do not impact the owner’s pr­operty rights during life.¹⁷ The beneficiary has no legal property rights until the owner’s death.¹⁸ The property passes to the beneficiary when the owner dies without going through probate.
• Nebraska life estate deeds. Life estate deeds grant one person (the life tenant) lifetime rights to the real estate (a life estate). Another person receives a future right to the property and takes full ownership when the life tenant dies.¹⁹ A life estate deed also bypasses probate. However, unlike with a TOD deed, a life tenant’s property rights are limited during life by the future owner’s enforceable interest.

The biggest practical difference between life estate deeds and TOD deeds is that a property owner who records a TOD deed does not give up any property rights—like the right to sell or mortgage the property. A life-estate holder cannot sell complete title to the property—just the life estate.

A life estate deed can also be a special warranty deed—depending on its wording. A Nebraska TOD deed can never provide warranty of title, so it cannot be a special warranty deed.²⁰

Common Uses of Nebraska Special Warranty Deed Forms

Special warranty deeds can be a good middle ground when the new owner makes a valuable payment and wants to be sure the title is good, but the current owner wants to limit risk. Under a special warranty deed, the buyer has the seller’s guarantee that no defects arose while the seller owned the property. The seller avoids accepting risk related to matters outside his or her knowledge and control.

This deal makes special warranty deeds somewhat common in sales of commercial property, farmland, and apartment buildings or other multi-unit residential real estate. A single-family home sale financed through a mortgage is less likely to involve a special warranty deed. Lenders often insist on a warranty deed’s complete guarantee, and homebuyers cannot afford the risk of a defective title after borrowing tens or hundreds of thousands of dollars. Quitclaim deeds are the more popular choice when no payment is involved, but special warranty deeds can also work for those transfers.

A person signing as a fiduciary sometimes uses a special warranty deed because fiduciaries may not have enough authority or information to give a general warranty. Any of the following fiduciaries might use a special warranty deed:

• A trustee signing a deed that transfers real estate from a trust;
• A corporate officer or LLC member signing a deed that transfers real estate bought from the entity;
• An agent under power of attorney signing a deed that transfers the owner’s real estate;²¹ or
• A conservator signing a deed that transfers the protected person’s real estate.²²

How to Create a Nebraska Special Warranty Deed

A Nebraska special warranty deed form must achieve the current and new owners’ goals and follow Nebraska law. It must meet all Nebraska requirements for a valid deed and include the language necessary to provide limited warranty of title.

Creating a Special Warranty Deed

Some states have laws with recommended language for special warranty deeds. When an owner signs a deed with the suggested language, it implies he or she provides limited warranty of title. Nebraska has no such legal language. A Nebraska special warranty deed must include warranty language that clearly defines the limited warranty agreed by the parties.²³

Nebraska special warranty deeds typically include the current owner’s covenants that:

• The owner holds good title;
• The owner has the right to transfer the property;
• The title is subject to no undisclosed defects; and
• The current owner warrants the title and will defend it against claims derived from the current owner (and no others).

The parties are free to change, extend, or limit what is covered by a deed’s warranty. A deed might, for example, exclude an existing lien or easements, covenants, and restrictions already recorded in the land records.

A Nebraska special warranty deed may also limit the property rights the deed transfers. Nebraska law assumes that a deed transfers the current owner’s entire span of ownership rights unless it names lesser rights.²⁴

Nebraska General Deed Requirements

Nebraska special warranty deeds must fulfill all legal requirements for Nebraska deeds. Nebraska’s deed requirements include:

• Formatting standards for deeds and other recorded documents;²⁵
• Items that all deeds must contain—such as party names and a legal description of the real estate;²⁶
• Signing requirements.²⁷

A deed may also need other data about the new owner. A deed that transfers real estate to more than one new owner—for example—should specify the co-ownership form the new owners will use.²⁸

Selecting a Nebraska Special Warranty Deed Form

Real estate laws vary greatly between states. A form intended for another state may leave out Nebraska requirements or rely on laws that apply only to the other state. A special warranty deed form that relies on language in another state’s laws will likely have different legal effects in Nebraska. A professionally prepared Nebraska special warranty deed form should be designed specifically for Nebraska law and be flexible enough to accurately show the agreed transfer terms.

1. See Morello v. Land Reutilization Comm., 659 N.W.2d 310 (Neb. 2003).
2. See Neb. Rev. Stat. § 44-1981(20).
3. Neb. Rev. Stat § 76-206.
4. Neb. Rev. Stat. § 76-208 (noting five covenants traditionally encompassing warranty of title).
5. Grand Island Hotel Corp. v. Second Island Development Co., 214 N.W.2d 253 (Neb. 1974).
6. Morello v. Land Reutilization Comm., 659 N.W.2d 310, 314 (Neb. 2003).
7. See, e.g., Neb. Rev. Stat. § 77-3205(2); Morello v. Land Reutilization Comm., 659 N.W.2d 310 (Neb. 2003).
8. See, e.g., Ohio Rev. Code §5302.07; Finnern v. Bruner., 92 N.W.2d 785 (Neb. 1958).
9. See, e.g., Cal. Civ. Code § 1092.
10. See Mich. Comp. Law § 750.275 (necessitating covenant deed by prohibiting the words warranty deed in a deed that does not provide complete warranty of title).
11. Nev. Rev. Stat. § 111.170.
12. Morello v. Land Reutilization Comm., 659 N.W.2d 310 (Neb. 2003).
13. Grand Island Hotel Corp. v. Second Island Development Co., 214 N.W.2d 253 (Neb. 1974).
14. Gustafson v. Gustafson, 476 N.W.2d 819 (Neb. 1991).
15. See Neb. Rev. Stat. § 44-1981(20).
16. Neb. Rev. Stat. § 76-3405.
17. Neb. Rev. Stat. § 76-3414(1).
18. Neb. Rev. Stat. § 76-3414(5).
19. See Neb. Rev. Stat. § 76-107.
20. Neb. Rev. Stat. § 76-3415(d).
21. Neb. Rev. Stat. § 30-4027(2).
22. See Neb. Rev. Stat. § 30-2653.
23. See Morello v. Land Reutilization Comm., 659 N.W.2d 310 (Neb. 2003).
24. Neb. Rev. Stat. § 76-104.
25. See Neb. Rev. Stat. § 23-1503.01(3) (establishing paper, print, and margin specifications).
26. See Neb. Rev. Stat. §23-1508; Neb. Rev. Stat. § 23-1509; Neb. Rev. Stat. § 23-1510.
27. See Neb. Rev. Stat. § 76-211 (requiring notarized signature of adult property owner); Neb. Rev. Stat. § 40-104 (requiring execution by non-owner spouse if deed conveys homestead).
28. See Neb. Rev. Stat. § 76-275.07.