Recently, in preparing for an upcoming closing, the closing attorney and the builder had an email discussion regarding the use of a General Warranty Deed versus a Special Warranty Deed. The deed is the document that legally transfers the property from the Seller, to the Buyer – how it’s worded is of importance, because it shows how the property is conveying, and what the ownership structure is. Now, I pride myself on knowing a little something about New River Valley real estate, but I have to admit that I was wrong – I thought we should be using a General Warranty Deed, when in fact per the Contract we were supposed to be using a Special Warranty Deed. Turns out, either was appropriate, but both are very different.
So what, right? Apparently people care about this whole thing. It’s important and stuff.
Since I obviously didn’t know what I was talking about, I asked John Spicer, of Frank, Spicer & Cox, to explain a bit further. He and one of his paralegals, Joe, explained in great detail the differences, and why one is used over the other.
Real estate in Virginia can be transferred generally by the use of one of three (3) types of deeds, the General Warranty Deed, the Special Warranty Deed and the Quit Claim Deed. With both General Warranty Deeds and Special Warranty Deeds the property is transferred from the seller to the buyer with certain guarantees against future problems or claims. The difference between a General Warranty Deed and Special Warranty Deed is the extent of the coverage of the warranty.
Both types of Warranty Deeds (Special and General) guarantee the buyer: 1) that the seller owns the title to the property; 2) that the seller is legally allowed to sell the property; 3) that the property has not already been sold; 4) that the property is free of debt or other claims (aside from those satisfied at the closing (i.e. deed of trust of judgment lien); and that the seller is responsible for any problems/faults with the title to property. However, where the guarantees in a General Warranty Deed cover the property’s entire history, the Special Warranty Deed only covers the period of time for which the seller owned it. While the seller in a General Warranty Deed must defend the title against all other claims and compensate the buyer for any unsettled debts or damages, the seller in a Special Warranty Deed is only responsible for debts and problems accrued or caused during his ownership of the property. The Special Warranty Deed is typically used by persons acting in a representative capacity (i.e. Trustees, Executors etc) or commercial real estate transactions.
The Quit claim deed does not convey any warranty of title by the seller. In essence, the seller is merely stating that IF he has any ownership interest in the property (which the seller is not warranting they have), then such interest is conveyed to the buyer. Quit claim deeds are used generally in estates where it is unclear whether an individual was an heir or beneficiary or there are other “gaps”.
The gist? Basically, a General Warranty Deed says that the Seller will defend the title to the property going backwards. A Special Warranty Deed means the Seller will defend the title to the property only for the time period the Seller owned the property.
And I have a headache. These lawyers like to make things even more difficult than real estate agents do.
Have more questions? Post them here in the comments, and we’ll ask John to clarify a bit more.
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