When purchasing a house, a lot is on the line. After all, it’s probably the largest purchase you’ll ever make. The last thing you would want is to purchase your ideal house only to have a bank subsequently ask you to prove your ownership of the property. A warranty deed can help with that.
Although this agreement may appear to be simply another piece of paperwork for your mortgage, it really contains crucial legal language that safeguards your house from any lawsuits. Discover what it is and how it functions.
What is a Warranty Deed?
There are two parties involved in a real estate deal: the grantor and the grantee. These might be people or companies.
A warranty deed is a real estate instrument that guarantees—or promises—that the grantor (seller) does own the estate completely and evident and that there are no outstanding loans, liens, lawsuits, or other forms of debt on it.
To put it another way, the seller is qualified to assign the grantee’s (buyer) ownership rights.
How Warranty Deeds Function
The property is not shown by a warranty deed as being yours presently. Instead, it implies that the prior owner is able to vouch for the absence of any other parties who may be claiming title or owing money on the property. Before the title is given to you, you do not truly own the property.
The warranty deed will provide information about the property’s address, mailbox number, legal description, transaction date, and the identities and addresses of all parties.
The warranty deed must be signed and submitted to the city or county authority responsible for maintaining real estate records in order to be considered legally enforceable. It is given to the grantee during the conclusion of the real estate transaction.
Benefits of a Warranty Deed
You want to ensure that you receive the correct deed to the property when you purchase a home.
A contract for deed, also known as a quitclaim deed, allows you to purchase a home, but it just transfers the seller’s interest in the property to you.
You could have to absorb the loan as well. A general warranty deed that places the ownership in your name is the greatest type of document.
Warranty Is Protection
You are protected by a general warranty deed from potential issues with the title to the home, as well as things like back taxes and unpaid maintenance bills.
The seller certifies that they have a clean title to the property and that no loans or other debts are outstanding.
If you need someone professional to help you with warrant deed then you can simply contact Quick Deeds right away.
You Receive a Protected, Clear Title
Your clear title to the home is granted by a general warranty deed, applicable to any home loan or financing you could take out.
A general warranty deed also safeguards you from pending lawsuits, such as those brought by a third party that later asserts partial ownership.
Your interest is completely covered by the seller’s warranty, which obligates him to pay all costs resulting from such circumstances.
You could occasionally receive a special warranty deed. With this, you are given a clean title, and the seller protects you against any title flaws that date back to the time when they possessed the property.
However, unlike a standard warranty, it does not shield you from any claims that go back to the seller’s ownership.
A general warranty protects you regardless of whether the title has been claimed by a former owner; in contrast, a special guarantee only covers the title of the present seller.
Verify with Your State
Since there are various exceptions, check the warranty deed rules in your particular state. The majority of general warranty deeds address current and upcoming issues.
For instance, the majority demand that the seller deliver any documentation required down the road to resolve a title issue. Ohio is one state that does not acknowledge this covenant or warranty, though.
Warranty Deed Types
A warranty deed might be of two different sorts. Let’s examine each in more detail now.
1. General Warranty Deed
The greatest degree of security for the customer is provided by a broad warranty deed. The seller is liable for any breaches of the general warranty deed, even if they occurred without their knowledge or while they did not own the property.
The following is ensured by a general warranty deed:
The property is owned by and transferable by the grantor under the law.
The property is free and clear of any active liens, mortgages, or other claims from creditors.
Clear title belongs to the grantor. The grantee has a right to reimbursement from the grantor if the warranty is broken.
The property will be given to the grantee by the grantor.
2. Special Warranty Deed
The main difference between a special warranty deed and a general warranty deed is that the former is only valid for a limited period of time.
In essence, the special warranty deed guarantees that the present seller is the owner of the property and that no claims were made against it while they were the owners.
No claims made before the seller obtained title are covered by the special warranty deed. The majority of these warranty deed deals involve commercial property.
To safeguard against future liens and other claims, title insurance is crucial. Regardless of whether a general or special warranty deed is used, the title firm will do the necessary investigation prior to the final sale to ensure that there are no potential breaches before the property is passed to the buyer.
3. Grant Deed
A landowner may occasionally substitute a grant deed for a warranty deed. There are no liens or other limitations on the land, and the gift deed offers basically the same safeguards. Third-party claims, however, are the one item that a grant document does not defend against.
Warranty Deed vs. Quitclaim Deed
Although a quitclaim deed and a warranty deed are similar, they are not the same. Only the grantor’s legal interest in the property is relinquished in a quitclaim deed. It doesn’t guarantee that other people or organizations will be interested in it as well.
A quitclaim deed is typically utilized when both parties have a history of trust, such as when transferring estate within a family, because the grantee isn’t given much security.
Trust Deed vs. Warranty Deed
The deed of trust is a different paperwork that you can mistake for the warranty deed.
A mortgage settlement or a deed of trust must be signed if you take out a mortgage to pay for a house purchase (but not both).
In the event that you default on your loan, the deed of trust protects the property purchase and appoints a third party (the trustee) to manage the foreclosure process.
It basically says that until you’ve paid off your property in accordance with the conditions of the loan, the trustee has legal ownership to it.