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Warranty Deeds: What You Need to Know

Warranty deeds can come into play as part of property ownership. But what is a warranty deed? Does it prove ownership of a house? Trust & Will explains.

If you’re getting ready to buy or sell your first house, you’ll want to be informed on the concept of a warranty deed. This real estate document provides a high level of protection for buyers, and plays an important part in negotiations and the transfer of ownership. As a buyer, you’ll definitely want to inquire about a warranty deed. As a seller, you’ll need to be prepared to provide one. This is especially true if you’re motivated to sell in a competitive market. In this guide, we’ll cover everything you need to know about warranty deeds: what they are, what they’re used for, how to obtain one, and answers to common questions.

What is a Warranty Deed?

A warranty deed is a document used in real estate to certify that a property is owned free and clear. This means that the owner is rightfully clear of any liens, mortgages, or any other types of claims. In other words, a warranty deed form is used to prove ownership. 

Warranty deeds come into play during a real estate transaction. The seller and the buyer are involved, both of whom can be either an individual or a business. The seller uses the warranty deed to prove to the buyer that they have the right to sell the property. 

As a homebuyer, a warranty deed is the gold standard. It offers the greatest level of protection because you’ll have peace of mind knowing that no other entity has a legal claim on the property. In the case that a warranty deed is absent, a buyer could run into a nightmare situation. They could be so excited to start the process of buying a home, only to find out that the property has liens on it. If you’re planning to sell property, be sure to obtain a warranty deed to prove your ownership to potential buyers.

Other types of deeds include special warranty deeds, quitclaim deeds, and transfer on death deeds. The difference between these types of deeds typically have to do with what kind of warranties and protections are being offered to the buyer.

How Do Warranty Deeds Work? 

Warranty deeds work by offering a property buyer a high level of protection and assurance. They’ll need the deed when they apply for a mortgage, and when they go to purchase title insurance.

Both buyers and financial entities will want to see the warranty deed to verify that:

  • The current property owner owns the property free and clear

  • The property does not have any liens or claims against it

  • The owner has the legal right to transfer the title

  • The title itself will not be subject to any third-party claims that would jeopardize the ownership of the property

  • The current owner is ensuring the buyer’s title to the property 

After the warranty deed is signed, the buyer can legally sue the seller if any title issues come up. That’s because the deed serves as a warranty, rendering the seller legally liable if they breach the contract in any way. 

What is the Difference Between a Deed and a Warranty Deed?

You may be wondering how a warranty deed differs from a traditional deed. A traditional deed simply transfers the ownership of a property from one party to another (in other words, the seller to the buyer.) Whoever legally holds the deed is the rightful owner of the property.

A warranty deed, on the other hand, contains special assurances that the seller makes to the buyer. These assurances or promises are called “covenants.” Common assurances include things such as:

  • The seller owns the land that the property sits on

  • Owner can rightfully transfer the title

  • There are no outstanding claims or liens on the property

Warranty deed forms can also include covenants for the future. Examples include:

  • The buyer won’t be surprised with a claim from another party

  • If third-party claims occur, the seller will defend the buyer

  • The seller will do whatever necessary to convey the title if any issues arise

As a homebuyer, it’s advantageous to obtain a warranty deed over a traditional deed whenever possible. As you can likely tell, a warranty deed offers protection and assurances against unpleasant surprises such as third-party claims. When buying a house, you want to feel sure that you’ll rightfully own the property without any contest.

Common Questions About Warranty Deeds

Now that we have a general understanding of how warranty deeds work, you likely have some more specialized questions to better your understanding. Here are some answers to questions that sellers and buyers are wanting to know:

Are Warranty Deeds Good?

Yes, warranty deeds are good. This question often comes up for new homebuyers and sellers because they’re exposed to a world of new jargon. As a buyer, especially, simply remember that you’ll want to demand a warranty deed. It will offer you the best level of protection because it guarantees that the previous owner will be held liable if any issues contesting rightful ownership arise. 

Does a Warranty Deed Prove Ownership?

No, a warranty deed does not prove ownership. A title search is the best way to prove that a grantor rightfully owns a property. The warranty deed is a legal document that offers the buyer protection. In other words, the property title and warranty deed work in tandem together.

The easiest way to understand this is to use an item purchase as an analogy. Let’s say that you purchased a new vacuum that comes with a warranty. The warranty indicates that you own the vacuum, but it doesn’t legally prove ownership. It’s the receipt and transaction record that prove your rightful ownership. However, the warranty gives you peace of mind because if any issues arise with the vacuum that weren’t your fault, you can go to your seller and file a claim to remedy the situation.

A home title and warranty deed work very much the same way.

Who Benefits the Most from Recording a Warranty Deed?

The buyer, or grantee, of a property benefits the most from obtaining a warranty deed. Through the recording of a warranty deed, the seller is providing assurances to the buyer should anything unexpected happen. If a third-party filed a claim against the property, even if the seller was unaware, the seller is legally liable to remedy the issue. The buyer is offered a great level of protection and thus benefits most. 

Should You Get a Warranty Deed? 

If you are in the market to buy a home, you should absolutely obtain a warranty deed whenever possible. A motivated seller will be prepared to meet your demands within reason, provided that you’re a qualified buyer. 

They will understand that you’re incentivized to protect yourself as much as possible. In addition, a seller with a clear conscience should have no qualms about recording a warranty deed. If they seem reluctant to provide you with one, it will serve as a good reason to probe them and discover what their reasoning is. 

After all, buying property is likely one of the largest purchases you’ll make in your lifetime. If you choose to obtain warranties for everyday items like a vacuum or a laptop, then you should absolutely have a warranty for your home. 

How to Get a Warranty Deed

To get a warranty deed, you can work with your real estate agent. You can also find downloadable templates online. The deed itself should list out the date of the real estate transaction, the full legal names of all parties involved, a concise description of the property in question, and the signatures of all parties. A warranty deed has to be notarized in order for it to be legally binding. 

Now that you’re informed on how warranty deeds work, you’ll likely want to move forward with obtaining one. If you’re a seller, it’ll help your listing stand out and give your potential buyers some assurance. As a buyer, you’ll be looking for this gold standard because having the highest level of protection will give you peace of mind. As long as there are no outstanding liens or claims lurking in the shadows, a warranty deed can lead to a win-win situation.

If you are in the process of buying or selling a house, it’s also the perfect time to think about updating or establishing your estate plan. Real estate transactions are a great trigger that should motivate you. After all, you’re about to experience a dynamic shift in your property and assets. This means that you’ll need to add or remove your home from your list of assets in your Will and/or Trust, and also evaluate your beneficiaries. 

At Trust & Will, we provide online estate planning services that make it easy to update (or establish) your estate plan at any time! Our goal is to make it so easy and affordable to the point that you won’t procrastinate. Protect yourself and your loved ones by getting started today! 

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