Difference between special warranty deed and grant warrant deed?

Asked by NT, San Jose, CA Fri Mar 7, 2008

I am interested in a foreclosure property and the bank is ready to sell it under special warranty deed. My agent told me most of the property sold in California is under grant deed. Now I am confused about what the difference is and he is not able to explain it. Can Buying a home under special warranty lead to any problems. Will I be able to sell the property easily if it is bought under special warranty deed. any pointer on more information is appreciated.

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Mark H., , Salt Lake City, UT
Tue May 6, 2008
You have received some misleading answers to your question. I will try to clear it up. A "Warranty Deed" has NOTHING to do with a home warranty. It is a type of deed. There are two kinds, a "special warranty deed" in which the grantor (seller) guarantees he encountered no clouds to the title during his period of ownership ONLY. in a "general warranty deed", the grantor guarantees to defend your right of title for claims arising from ANY period. A general warranty deed thus includes all of the covenants of a special warranty deed, and adds a few more.

It is extremely common for a special warranty deed to be used in commercial transactions or where property has been seized by foreclosure. You should be dealing with an agent who understands the difference.

In many states, the title insurance will make the difference an academic one, since when you are covered by title insurance, all of the covenants in a general warranty deed are insured. Make sure you close at a title company and have a full title search. Again, you should be working with a realtor who knows this, or who can refer you to a title company that would know. It sounds to me like your realtor is doing absolutely nothing for you, and charging 3% for his trouble.
4 votes
Maggie, your…, , Long Beach, CA
Fri Mar 7, 2008
A general warranty deed will convey title to a buyer along with certain warranties of title from you, the seller, to the buyer. If it turns out that you sold the home and never really owned the home, the seller can sue you for breach of warranty given to the buyer under the deed.

A special warranty deed is generally used in commercial transactions, but an individual could also use that form. The difference between the general warranty and special warranty deeds is that the warranty in the special warranty deed only applies to items that occurred while the owner owned the property. Here again, if the seller never really owned the property, the buyer could sue the seller for failing to convey title to the buyer.

But if there is a problem on the title to the property that occurred prior to the seller’s ownership of the home, the buyer could sue the seller for the breach of the warranty under the general warranty deed but not under the limited warranty deed.
2 votes
Robert Lei, Agent, Cupertino, CA
Fri Oct 1, 2010
Special warranty deed has nothing to do with "As Is". What it means is the grantor does not warrant against title defects arising from conditions that existed BEFORE he owned the property. In some states, the special warranty deed is not as protective of the buyer as the general warranty deed. The special warranty deed says:
1. Grantor warrants that they have received title
2. Grantor warrants, unless specifically noted in the deed, that the property was not encumbered during THEIR period of ownership.

In effect, it only warrants the title against THEIR OWN actions or omissions. They warrant nothing PRIOR to their taking title.

However, the state of CALIFORNIA views warranty deed and grant deeds and quitclaim deeds as the same thing. The grant deed conveys ownership and your title insurance company guarantees you against encumberances.
1 vote
Ali Moein, Agent, Saratoga, CA
Fri Mar 7, 2008
Dear NT,
Here is the simplest definition of "special warranty deed": The seller is selling the home AS-IS.
Hope this helps:)
1 vote
Bimbaawaking, Home Buyer, New York, NY
Sat Oct 20, 2012
a warranty is an instrument to safeguard the rights of a customer
0 votes
Michelle Car…, Agent, Coppertino, AL
Sun Apr 10, 2011
The bank is likely using a special warranty deed to limit their liability (what a surprise). You may want to talk to the escrow or title company to see if they can explain the terms better for you AND verify that no other parties have any financial interest in the home, other than the current owner and lender. For example, as it's a TH, people often are behind on their HOA dues and that ends up being an additional lien against the property. However be sure to get title insurance, this is the most important protection for you in these distressed sales.
0 votes
Andy, , California
Fri Apr 8, 2011
Hi everyone,

Who read the "special warranty deed" NT asks before answering it? Or How can you know the deed is the same as the deeds you know?

0 votes
NT, Home Buyer, San Jose, CA
Sat Mar 8, 2008
Thanks for the reply, but as a first time home buyer I am still confused. So if I buy a house under special warranty title, it does not mean that I will have to sell it under the same warranty deed. Also if I am getting home inspection as well as buying home warranty, what risk do I have with special warranty. BTW this is a town home that I forgot to mention earlier. Should I push the bank to get a grant deed warranty.

0 votes
yes it has nothing to do with a home inspection or a home warranty. it is about the title to the property only, and as stated a title insdurance policy should protect you.
Flag Wed Mar 13, 2013
As explained above a Warranty Deed warrants clear title going backward perpetually and a Special Warranty Deed only warrants that there were no "clouds" or defects placed against title during the Grantor of the Special Warranty Deeds ownership. By way of example: If you receive a Warranty Deed from someone and at a later date find out there was a defect in the title caused by somebody, let's say 3 ownerships ago, the Grantor of the Warranty Deed is still liable to you for that defect. If the Seller gave you a Special Warranty Deed instead and the defect did not occur during their ownership but rather 3 owners ago then you have no recourse against the seller that gave you the Special Warranty Deed. Although you can't always get it you should push to get a Warranty Deed when you buy so you are protected all the way backward and you should convey by Special Warranty Deed when you sell so you only have liability on any defects in title you created yourself.
Flag Wed Dec 5, 2012
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