What Is a Warranty Deed?

What is a warranty deed on a house?

A warranty deed is a legal document used in real estate transactions that formally transfers ownership and guarantees the seller has clear, marketable title to the property. In other words, the seller legally promises that they own the home outright and can transfer it without issues.

This legal document contains promises made by the seller of the property, such as:

• No other person or entity has any claim on the property or right of possession
• All taxes and liens have been paid on the property
• There are no defects in title to the property

“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.”

Common scenarios where a warranty deed is used

A warranty deed comes up in many everyday real estate situations. Below are some of the most common times when a warranty deed is used and why it matters.

• Traditional home sales: Most buyers receive a warranty deed when they purchase a home. It gives them the strongest protection because the seller promises that the title is clear and free of problems. This helps prevent surprises later, like unpaid liens or disputes over ownership.
• Refinancing a mortgage: When homeowners refinance, the lender may require a warranty deed to confirm who owns the property. This helps the lender make sure the title is clean before offering a new loan.
• Inheritance or settling an estate: When heirs receive a property, a warranty deed may be used to transfer ownership from the estate to the new owner. It helps show that the estate has the right to transfer the property and that the title is in good standing.
• Family transfers: Warranty deeds can be used when a home is transferred between family members, such as from a parent to a child. Even though the parties know each other, a warranty deed can help avoid future disputes by clearly stating that the title is clean.
• Buying or selling newly built homes: Builders often use warranty deeds when transferring a new home to the buyer. This assures the buyer that the builder has full ownership of the property and that there are no title issues tied to the land or construction.

» MORE: When is the best time to buy a house?

Key covenants in a warranty deed

A warranty deed includes several legal promises, known as covenants, that protect the buyer’s ownership rights. These covenants make warranty deeds stronger than other types of deeds because they hold the seller responsible if problems with the title come up later.

Each covenant below covers a different part of the seller’s guarantee and helps the buyer feel confident that the title is clear.

Covenant of seisin

The covenant of seisin means the seller truly owns the property and has full title to it at the time of transfer. In simple terms, the seller is promising that they are the rightful owner. This protects the buyer by ensuring they are purchasing a property from someone who legally has the right to sell it.

Covenant of right to convey

This covenant confirms that the seller has the legal authority to transfer the property. Even if the seller appears to own the home, certain legal issues, such as co-ownership disputes or restrictions in previous documents, might prevent a valid transfer. The covenant of right to convey reassures the buyer that the seller has full power to pass ownership without issues.

Covenant against encumbrances

Encumbrances are claims or limitations on a property, such as liens, unpaid taxes, easements or unpaid HOA fees. In this covenant, the seller promises that the property is free of these problems unless they are clearly stated in the deed. This protects the buyer by reducing the risk of unexpected debts or restrictions tied to the home.

Covenant of quiet enjoyment

The covenant of quiet enjoyment protects the buyer from future claims against their ownership. If someone later challenges the buyer’s right to use or possess the property, this covenant requires the seller to address the issue. It helps ensure the buyer can occupy and use the property without interference from outside claims.

Covenant of warranty forever

This covenant requires the seller to defend the buyer’s title rights not only at the time of sale, but in the future as well. If any title issue arises, even years later, the seller may be responsible for resolving it or compensating the buyer. This long-term promise is one of the strongest protections offered in a warranty deed.

Types of warranty deeds

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.

General warranty deed

Due to the extensive protection it offers to buyers, the general warranty deed is a popular option in real estate transactions. It guarantees that the seller is the property owner, that the property is free and clear of any liens or encumbrances and that the title will withstand any third-party claims of ownership.

Special warranty deed

Special warranty deeds are not as thorough as a general warranty deed. A special warranty deed only includes two guarantees: that the seller has received the title and that the property is not encumbered (contested). It does not cover any title problems that may have existed before the seller owned the property.

This deed is commonly used in transactions involving banks, foreclosures or corporate sales where the seller cannot fully vouch for the property’s prior history.

Statutory warranty deed

Statutory warranty deeds are short-form versions of a general warranty deed. These deeds are available in some states and don't include a comprehensive list of promises. Instead, the promises are outlined in state statutes, which makes them legally enforceable.

Other types of deeds

Warranty deeds are just one type of property deed. Other deeds are used in different situations and offer varying levels of protection for buyers and sellers.

Quitclaim deed

Quitclaim deeds are commonly used to transfer property to a family member rather than sell it. These types of deeds facilitate the rapid transfer of land; this might be used during a divorce or when a family member gives property to a relative as a gift.

Deed in lieu of foreclosure

A deed in lieu of foreclosure is an agreement where a homeowner voluntarily transfers the property to the lender to avoid foreclosure. Although it involves a deed, it is not a warranty deed and does not include the seller’s title guarantees.

Instead, it helps both sides settle the debt more quickly. The lender accepts ownership, and the borrower may avoid the credit damage and legal process of a full foreclosure.

Deed of trust

A deed of trust is a binding legal document between three separate entities. In this type of transaction, a lender and borrower make an agreement to transfer a property to a neutral third party that will act as the trustee.

Bargain-and-sale deed

A bargain-and-sale deed falls somewhere between specialty and quitclaim deeds in terms of the protections it offers. This type of deed includes a warranty that the seller has the title to a piece of property. However, the seller does not promise the property is free and clear of any third-party claims.

Grant deed

Grant deeds are one of the simplest forms of deeds used today. It promises that the property is free of liens and that the buyer will have the right to transfer or sell the property.

How to get a warranty deed

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:

• Date of the transaction
• Parties involved
• Property description
• Buyer signatures

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. Many buyers and sellers also work with a real estate attorney or title company to prepare the deed so it meets state requirements and avoids errors.

Remember, a warranty deed must list the transaction date and all parties involved to be valid. 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.

Executing and recording a warranty deed

Executing and recording a warranty deed involves a few clear steps:

1. Draft the deed: The buyer, seller or a title professional prepares the document and includes all required details, such as names, property description and type of warranty provided.
2. Review for accuracy: Both parties check the information for mistakes. This helps prevent recording delays or legal issues later.
3. Sign in front of a notary: The seller signs the deed with a notary present. In many states, the buyer may also need to sign.
4. Submit the deed for recording: The completed and notarized deed is taken to the county recorder or clerk’s office. A small recording fee is usually required.
5. Receive confirmation: Once recorded, the county adds the deed to public records. The buyer then receives a copy showing the official recording information.

» MORE: How to negotiate your mortgage closing costs

Risks and limitations of warranty deeds

While warranty deeds provide strong title protection, they do not cover every issue a buyer may face. Buyers still need to complete inspections, review disclosures and work with a title company or attorney to fully protect themselves. Key limitations include:

• No protection for the home’s physical condition: Problems like roof leaks, foundation issues or outdated electrical systems are not covered. A home inspection is still essential.
• No coverage for title issues the buyer already knew about: If an easement, lien or restriction was disclosed in writing, the seller is not responsible for future disputes related to it.
• No responsibility for issues created after the sale: New liens, unpaid bills or other claims that arise after closing fall on the current owner, not the seller.
• No protection from outside legal changes or third-party actions: Boundary disputes, zoning changes or neighbor-related conflicts are not covered by the deed.

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