Real Estate Literacy: What is a Special Warranty Deed?
A Special Warranty Deed is a legal document used in real estate transactions to transfer property ownership with limited guarantees about the title. It ensures that the seller (grantor) only guarantees that there were no title issues during their period of ownership, but does not cover any claims or defects that may have existed before they acquired the property.
Key Features of a Special Warranty Deed:
✔ Limited Protection for the Buyer – The seller only warrants that they did not create any title defects, but they do not guarantee a clean title before their ownership.
✔ Common in Commercial & Foreclosure Sales – Often used in real estate transactions where full title guarantees are not expected.
✔ Includes Legal Ownership Transfer – The grantor gives the grantee (buyer) the right to own and use the property.
When is a Special Warranty Deed Used?
✅ Commercial Real Estate Transactions – Many businesses and investors use special warranty deeds instead of full warranty deeds.
✅ Foreclosed or Bank-Owned Properties – Lenders selling foreclosed properties often use this deed to limit liability for past ownership issues.
✅ Estate or Trust Sales – If an estate executor or trustee sells property, they may use a special warranty deed to avoid responsibility for historical title defects.
Special Warranty Deed vs. Other Deeds
Type of Deed
What It Guarantees
Who It Protects
General Warranty Deed
Guarantees a clear title from all past owners
Strongest protection for buyers
Special Warranty Deed
Guarantees no title issues only during seller’s ownership
Limited protection for buyers
Quitclaim Deed
Transfers ownership with no guarantees about title
No protection for buyers
Potential Risks for the Buyer
Since a Special Warranty Deed does not cover previous title issues, buyers may face risks such as:
❌ Unpaid liens or back taxes from prior owners
❌ Undisclosed heirs or ownership claims
❌ Easements or property use restrictions
💡 How to Protect Yourself: Buyers should consider title insurance to safeguard against any undiscovered title defects from past owners.
Bottom Line:
A Special Warranty Deed offers limited protection compared to a General Warranty Deed, making it best suited for commercial or non-traditional real estate transactions. If you’re buying a home and receive this type of deed, doing a title search and securing title insurance is strongly recommended.