A deed is a legal document that conveys ownership of property from one person to another. Texans have several different types of deeds to choose from when transferring ownership. This article will compare two common types of deeds, the General Warranty Deed and the Special Warranty Deed. Both deeds guarantee a clear title, one without any encumbrances. In other words, the grantor or seller is the undisputed, legal owner of the property. However, important differences between these two types of deeds make them appealing for different reasons.
General Warranty Deed
This is the most common type of deed in Texas, as many sellers agree to using it without realizing its potential impact. However, because of its legal ramifications, grantors should understand what they are agreeing to when they make a General Warranty. The grantor in a general warranty deed guarantees that the chain of title is clear “back to sovereign,” meaning since the property was owned by the state of Texas. With that long-reaching guarantee, the grantor is at risk if the title is not clear, even if a lien or other title issue was in place before the grantor took ownership of the property. The warranty language in a general warranty deed typically reads as follows:
Grantor binds Grantor and Grantor's heirs and successors to warrant and forever defend all and singular the Property to Grantee and Grantee's heirs, successors, and assigns against every person whomsoever lawfully claiming or to claim the same or any part thereof, except as to the Reservations from Conveyance and the Exceptions to Conveyance and Warranty.
Special Warranty Deed
A Special Warranty Deed is like a General Warranty Deed but, importantly, it limits the scope of the grantor’s responsibility. Note the key difference in bold type below:
Grantor binds Grantor and Grantor's heirs and successors to warrant and forever defend all and singular the Property to Grantee and Grantee's heirs, successors, and assigns against every person whomsoever lawfully claiming or to claim the same or any part thereof when the claim is by, through, or under Grantor but not otherwise, except as to the Reservations from Conveyance and the Exceptions to Conveyance and Warranty.
The operative language limits the grantor’s liability for title defects that occurred during the grantor’s ownership of the property. Among other things, it guarantees that the grantor has not sold the property twice, allowed a lien or levy against the property, and that there are no outstanding fees or taxes against the property. If a problem with the title occurred before the grantor took ownership, a Special Warranty does not make the grantor liable.
A Compromise
If the grantor has the advantage of using a Special Warranty Deed, the grantee may need to rely on his or her title company to indemnify the grantee in the event of any title issues. Fully understanding the differences between a General Warranty Deed and a Special Warranty Deed is a challenge that requires someone familiar with the complexities of grant deeds in Texas. Consulting a lawyer with such expertise will help avoid common pitfalls in real estate transactions.
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