Warranty Deed

How a Warranty Deed Works

A warranty deed transfers property from the current property owner (grantor) to one or more new owners (grantees). By signing the warranty deed, the grantor guarantees the grantee against all title issues, regardless of when they arose. This guarantee is not limited to the time when the grantor owned the property. Even if the title issue was caused by someone who owned the property before the grantor, the grantor is legally responsible.

Other Names for General Warranty Deeds

A warranty deed is sometimes called a general warranty deed. Using the word “general” distinguishes a general warranty deed from other deeds that provide a limited warranty, like special warranty deeds, statutory warranty deeds, or limited warranty deeds. As a practical rule, though, the terms warranty deed and general warranty deed are interchangeable.

Relationship of General Warranty Deed Form to Warranty of Title

The name warranty deed identifies the deed as one that conveys a full warranty of title. In most states, this full warranty of title includes these six guarantees, known as covenants of title:

1. That the grantor has the legal right to convey the property and has not agreed to transfer it to anyone else (covenant of right to convey);
2. That the grantor owns or has a legal interest in the property (covenant of seisen);
3. There are no encumbrances that than those that have been disclosed (covenant against encumbrances);
4. That the grantee and anyone who buys or inherits the property from the grantee will be able to enjoy the property without being interrupted by someone else that claims to have superior title and that they will not be forcibly removed from the property or lose possession of it (covenant of quiet enjoyment);
5. That the grantor will protect the grantee if someone else claims to have superior title to the property (covenant of warranty); and
6. That the grantor will take whatever actions are necessary to fix any problems with the grantee’s title to the property (covenant of further assurances).

Most states recognize all six covenants, but in some states—like Ohio—warranty deed does not include the covenant of further assurances. The grantor is responsible for any breach of these covenants, even if the breach was caused by something that happened without the grantor’s knowledge and before the grantor owned the property.

Warranty deeds place the risk on the grantor. The grantor could be responsible for unknown title issues caused by someone else. To mitigate against this risk, title insurance is used in most transactions involving warranty deeds. Purchasing title insurance shifts risk to the title insurance company instead of the grantor. It also helps ensure that a full title search is performed and that all foreseeable title issues are addressed and resolved before the deed is signed.

Comparison of Warranty Deeds to Other Forms of Deeds

The warranty of title is about risk allocation. A warranty deed allocates all risks to the grantor. The grantor is responsible for all title issues regardless of when they arose. Other forms of deeds provide less risk to the grantor. These deeds include:

• Special warranty deeds—also known as grant deeds, covenant deeds, statutory warranty deeds, or limited warranty deeds—which limit the warranty to the period when the grantor owned the property; and
• Quitclaim deeds—also known as quit claim deeds—which provide no warranty of title.

Using one deed form over another can have significant legal consequences.

Example: Ashley conveys property to Brett by warranty deed. After the conveyance, a neighbor sues Brett over a boundary issue caused by someone earlier in the chain of title. Ashley was not aware of the boundary issue when she signed the warranty deed, and it wasn’t caused by anything that Ashley did. Still, Ashley is legally responsible to Brett under the warranty deed. Had Ashley used either a quitclaim deed or a special warranty deed, she would not have been legally responsible.

The name warranty deed deals with the warranty of title. Some deeds are named after features other than the warranty of title. Life estate deeds, lady bird deeds, and transfer-on-death deeds are all named after estate planning and probate avoidance features. Because these names relate to different features, two names may apply to a single deed. For example, a single deed may be both a quitclaim deed and a lady bird deed.

Common Uses of General Warranty Deeds

Because of the risk that warranty deeds allocate to the grantor, they are usually used in the sale context when the buyer or seller will purchase title insurance on the property. The purchase of title insurance protects the buyer while lessening risk on the seller.

Warranty deeds are rarely used outside of the sale context. If a grantor is giving property away, the grantor is usually not comfortable providing a full warranty of title that would make the grantor liable for unknown title issues. This is especially the case if the parties will not purchase title insurance as part of the transfer.

How to Create a General Warranty Deed

Each state’s laws apply to warranty deeds used in that state. In some states, the warranty provided by a warranty deed is rooted in common law. The actual form of the warranty deed is derived from the common law and from customary real estate practice in that state. In other states, a specific statute authorizes the use of warranty deeds. In these states, the statute will usually contain specific language that must be included in the vesting paragraph.

The warranty is only part of the deed. The deed must also contain other customary elements, including:

• An accurate legal description of the property (usually the same one used in the prior deed);
• A recitation of consideration paid as part of the transfer, if any;
• If more than one grantee will own the property, a description of the way that the grantees will hold the title;
• The font size and page format required to meet the state’s recording laws; and
• Signature and notary requirements that track the statutory form for validity.

The warranty deed should be created with each requirement in mind and use precise language. Imprecise language can seem harmless to a layperson but may have legal consequences. In some cases, using the wrong warranty language can even result in criminal liability.