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Key takeaways

  • A warranty deed is a legal document guaranteeing that a property’s seller has the legal right to sell the property and that there are no outstanding debts or legal claims against it.
  • There are two main types of warranty deeds: general, which provides the buyer full protection, and special, which provides limited protection.
  • A warranty deed is not the same thing as title insurance, though they are similar. Buyers should obtain both.

There are a lot of things you want to feel confident about when you’re buying a new home. A big one you might not think of is the confidence that no one else can claim that they own the home, too, or that you owe them money for part of it. A warranty deed is designed to provide exactly this kind of comfort. Here’s more about why a warranty deed is necessary when buying a home, and how it works.

What is a warranty deed?

Essentially,  a warranty deed is a legal document that protects a buyer by providing assurance that there are no outstanding debts or legal claims against the property they are buying. In other words, it provides assurance that the property has a clear title — guaranteeing that the seller (often called the “grantor”) has the legal right to sell the property, and that ​​the buyer (or “grantee”) will not be stuck with any undisclosed legal entanglements after closing. In the event anything happens that could threaten the transfer of the property, the buyer can hold the previous owner accountable.

If you’re applying for a mortgage, your lender may require a warranty deed to approve the financing, with the deed typically being signed before closing the home sale. The seller’s signature indicates that they have the authority to transfer the property’s ownership rights to the property to the buyer. If anyone else says that they are owed money for the property, the buyer now has a document that proves he or she isn’t responsible for the debt.

Warranty deed example

Claims made against warranty deeds can include undisclosed easements or liens, third-party ownership interests and unresolved lawsuits. But they can also include more everyday examples. Let’s say, for instance, after you’ve closed on your home purchase, a plumber comes forward and claims that he is still owed $800 for a job he performed when the previous owner occupied the home. Your warranty deed would mean that the previous owner must pay that bill, not you.

If a warranty deed could speak in layman’s terms, the message from the seller would be simple: “I promise that no one is going to knock on your door and say that they have any rights to this property.”

General warranty deed vs. special warranty deed

There are two main types of warranty deeds: general and special.

  • General warranty deed: As a homebuyer, a general warranty deed is the preferred option. That’s because it provides assurances that you are receiving the property free of any present or past title defects or claims. This is the highest level of protection a buyer can receive when property ownership is transferred.
  • Special warranty deed: On the other hand, a special warranty deed only provides limited protection to the buyer — it ensures only that the seller has not negatively impacted the property’s title during their period of ownership.

Let’s say you receive a warranty deed from someone who owned a piece of property from 2017 to 2022. Later, someone who owned the property before that timeframe claims he or she still owns it. If you have a general warranty deed, you’d be protected. With a special warranty deed, your options are limited, and you may be vulnerable to past liabilities like this one.

Both of these types of warranty deeds, however, are better than a quitclaim deed, which offers no real protection to the buyer at all.

Does a warranty deed mean you own the property?

A warranty deed is not the document that signifies official, legal ownership of a property.  Rather, it indicates that the previous owner made you a guarantee that he or she owned the property outright and that no one else can claim they are owed any money. The official evidence of your ownership of the property is the title, not the warranty deed.

How is a warranty deed different from title insurance?

While a warranty deed and title insurance are similar, they serve different purposes. A warranty deed shows that there are no claims to the property. A title insurance policy, though, offers protection from financial loss associated with ownership issues, and transfers any such risks to the insurance company. Title insurance can cover a wide range of potential claims, including falsification of documents, unpaid property taxes or HOA fees, fraud and more.

“Title insurance is often the costliest of the closing costs buyers will incur,” says Greg McBride, CFA, Bankrate chief financial analyst. “But it can be particularly valuable by protecting a new owner from any liens or claims against the property that weren’t uncovered in the title search.”

Homebuyers should obtain both a warranty deed and a title insurance policy during the closing process.

How to get a warranty deed

When you’re buying a home, your real estate lawyer can make a warranty deed a requirement for the transaction to take place. If you’re selling your home, it’s also smart to work with an attorney to make sure this document is in order.

In addition, there are many ways to download a warranty deed template online. To make the deed part of official records, be sure to get the document notarized and filed at your county clerk’s office.

Bottom line

Buying a home is a big deal — it’ll likely be the biggest purchase you make in your life — so it’s important to make sure that no one else is going to challenge your rights to the property. Given what’s at stake, a warranty deed is essential. This document guarantees that the seller has the legal right to sell the property and that there are no outstanding debts or legal claims against it. That way, when you become the new owner, no unpleasant surprises will be waiting for you.