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When purchasing real estate it is important to understand what is a warranty deed.

A warranty deed guarantees a buyer that the property they are considering buying has a clear title that is completely free of any claim by another person. This type of deed is usually used in residential property transactions between unrelated parties.

There is a general warranty deed and a limited warranty deed. A general warranty deed guarantees that the seller will defend the buyer’s title to a piece of property. A limited warranty deed defends the claims made only during the time the seller was the owner of the property.

When selling foreclosed property, banks prefer limited warranty deeds. This is because the seller, in this case, the bank, only guarantees that they received the title to the property and that there are no encumbrances during their ownership. This means they only guarantee against their own omissions or defects and not against the title prior to their possession.

What is a warranty deed for general purposes? Requirements for a general warranty deed are:

  • A statement by the seller that there are no debts or holds against the property other than the ones in the public record
  • A statement that the seller is the owner of the property and may sell it
  • A guarantee that if the seller is alive and able to, he or she will compensate the buyer for any losses if the title ever fails

Since it is possible that a seller could die or declare bankruptcy and not be able to pay if a previous lien or financial encumbrance is discovered after the sale, title searches and title insurance often accompany a sale that involves a warranty deed.

A title search is usually conducted by a professional who researches public county documents of real property for three main areas.

  • The exact location of the property and the present legal owner
  • Any outstanding mortgages, judgments, or liens that prevent a clear title for the buyer
  • Details on easements or other restrictions on the property

Title insurance assures a clear title and lenders who provide mortgage funds usually require it. Title insurance usually requires a one-time fee and is available for sellers, buyers, and lenders. It ensures the parties involved with the transfer of the property that the title is clear and there are no encumbrances on the property.

A property owner must understand what is a warranty deed if he or she personally wants to write the deed. The following information must be in the warranty deed:

  • The names, addresses, and signatures of all the people involved in the sale
  • The physical address and a legal description of the property
  • The identification number of the property
  • The signatures of witnesses
  • The seal and signature of a notary

A warranty deed form is available online. It is also possible to create one based on the information it needs to contain. It is necessary to get the full names of all the people involved including the seller or grantor and the buyer or grantee. These names should all be on one page.

Every person involved in the sale, including witnesses, whose name is on the deed should understand what is a warranty deed and sign it. The deed should be notarized because it is a legal document. It may not be accepted by the county recording office if it is not notarized.

When appearing before the notary, each signatory needs to have proper photo identification. After the warranty deed has been signed and notarized it should be recorded in the county court or recorder’s office. This will make it part of the record of ownership or chain of title for the property being sold as well as part of the public record. There may be a small fee for this.

When the warranty deed is signed by the proper people, notarized, and recorded with the public records office, it should be given to the purchaser at the time of closing. Title insurance is also important because even with a warranty deed if the seller dies or goes bankrupt, there is no protection for the buyer if any encumbrance is claimed.

Attention! We are not attorneys and we are not lawyers. We cannot represent customers, select legal forms, or give advice on rights or laws. The article provided is for information ONLY and is NOT a substitute for the advice of a lawyer.