What is a second mortgage and how do you qualify for one?
A second mortgage is a loan taken out against the equity in your home. Learn more about how they work and how you qualify for one.
Sarah Harris
When you’re buying a new home, it is fun to pick paint colors and search for that one couch that fits your space just right. Not as fun, but more important, is understanding the jargon that comes with your new purchase. One term you will come across will be the warranty deed, which is a legal document that protects you as the buyer from any potential legal issues that could arise with the property in the future.
Here’s what you need to know about warranty deeds and how to protect yourself as a buyer before signing mortgage docs.
“A warranty deed can provide peace of mind and protect the buyer's investment in the property. It ensures that the seller has the legal right to sell the property,” said Velody Foye-Byrd, a real estate investor and the founder of Eagle Home Partners.
This legal document contains promises made by the seller of the property, such as:
A warranty deed is an essential part of any transaction involving real estate, as it helps to protect both parties involved. However, “it's important to note that a warranty deed doesn't guarantee the condition of the property itself,” said Foye-Byrd. “Buyers should still conduct a thorough inspection of the property and review any disclosures provided by the seller to ensure that the property is in good condition and meets their needs.”
There are several types of deeds available for transferring ownership of a property. Understanding each type of deed will ensure you are selecting the right protection for your specific situation.
Warranty deeds are used when a buyer is seeking financing for either title insurance or a mortgage. No matter which type of deed is used, it will include key information such as:
There are several ways to get a warranty deed started. You can request a blank one from your real estate agent or download a template online.
Remember, a warranty deed must list the transaction date and parties involved. It must also contain a thorough description of the property being sold and the signature of each buyer. Every warranty deed must be signed with a notary present.
While sometimes used interchangeably, a deed and title are two different things. A deed is a legal document that transfers ownership of a property from one party to another, while a title is a legal concept that defines ownership, including any legal claims or liens on the property. When you buy a property, you receive the deed as evidence of your ownership, and the title is transferred to your name in the public records.
Yes. Although a warranty deed provides some protection to the buyer, title insurance is still recommended when purchasing a property. A warranty deed guarantees that the seller has the legal right to transfer ownership and that there are no liens or encumbrances on the property, but it does not protect against unknown defects in the title or against any claims that may arise in the future.
Yes, it is recommended to have both a title search and a general warranty deed when purchasing a property. A title search is a process of examining public records to verify the current and historical ownership of the property, as well as any liens, claims or encumbrances that may affect the property's title. It is important to conduct a title search to identify any potential issues with the property's title, which could affect the buyer's ownership and use of the property.
A warranty deed is a legal instrument that provides the highest level of protection for both buyers and sellers in real estate transactions. It not only protects against defects in title but also provides liability protection to both parties from any future claims that may arise from the property's past.
When you ensure that all parties involved understand what protections are offered by the warranty deed, any potential issues or disputes can be avoided, and a successful sale can happen.
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