The difference between a General Warranty Deed and a Special Warranty Deed is the extent of the title warranties the Seller gives to the Buyer. With a General Warranty Deed, the Seller warrants or guarantees clear title for the entire ownership history of the property. With a Special Warranty Deed, the Seller only warrants against title problems that arose during the Seller’s period of ownership. Buyers prefer General Warranty Deeds because they offer broader protection, while Sellers prefer Special Warranty Deeds to limit their liability.
What is the Difference Between a General vs Special Warranty Deed
The primary difference between these two deeds is the extent of the “warranties” the Seller is giving to the Buyer.
There are three options:
These are not “warranties” as they relate to the condition of the property, such as the foundation or an air-conditioner. Instead, these are warranties of title or ownership of the property.
Good to know: Title is the legal right of ownership to property. A Deed is the document which is used to transfer property title.
These title warranties pertain only to the condition of the title to the property. NOT the condition of the structures on the property.
Warranty Deeds and Property Condition
Warranty language in a deed concerns the warranty of title to the property and is separate from “AS IS” provisions, which address only the physical condition of the improvements.
What Does an “AS IS” Clause Mean in Warranty Deeds
A Warranty Deed “AS IS” clause or provision refers only to the property condition. In other words, the condition of the structures on the land.
With an “AS IS” clause, the Seller is telling the Buyer that if something breaks, do not call the Seller. The property was sold “AS IS” as to the physical condition of the property. The Seller is making no promises to fix anything that breaks.
Good to know: Keep in mind that there may be legal exceptions to the enforceability of an “AS IS” clause IF the Buyer can prove there was fraud involved. Also, this type of “AS IS” provision does not apply to the condition of the title to or ownership of the property.
Special Warranty Deed vs General Warranty Deed in Texas
Getting back to the main difference between a Special Warranty Deed vs General Warranty Deed in Texas – the extent of the title warranties – with Buyers typically favoring broader protections and Sellers preferring narrower ones.
As a rule of thumb:
The difference is the extent of the warranty of title being given by the signing party.
Understanding Warranty of Title
When you buy real estate, you want your Seller to guarantee he or she really owns the property. This is referred to as the “Warranty of Title.” Seller promises Seller owns the property 100%. In other words, Seller is promising that no other person will claim the property.
Note: A Buyer also wants a guarantee or a promise that there are no liens or other claims to use the property. This warranty or promise is referred to as the “Warranty Against Liens and other Encumbrances.”
Good to know: Liens can include judgments, tax liens, child support liens, home improvement liens, or any other loan secured by the property. Encumbrances can include leases, licenses to use the property, or any other claim that prevents the Buyer from 100% use of the property.
If there are two names on the deed now and you want to remove one name, it is common to use either a Special Warranty Deed or a General Warranty Deed.
The General Warranty Deed
A General Warranty Deed provides the broadest title protection, guaranteeing ownership and freedom from undisclosed encumbrances except for those specifically listed in the deed.
Full Warranty of Title
A General Warranty Deed is a full warranty of title. Seller is promising that the Seller owns the property 100% and that there are no liens or encumbrances affecting the property except the items listed in the deed.
With a General Warranty Deed, if any problems arise later that impact the title or ownership of the property that were not listed in the deed, the Seller may have breached the warranty and may be sued, regardless of the problem.
Good to know: Keep in mind that potential problems listed in the deed are exceptions from this warranty of title. Common exceptions include current and future property taxes, the mortgage used to buy the property and roads that may be on the property.
When to Use a General Warranty Deed
A General Warranty Deed provides the Buyer with the most comprehensive warranty of title available. It is commonly used in the following situations below.
Attorney-prepared General Warranty Deeds for the most common needs:
The Special Warranty Deed
A Special Warranty Deed, on the other hand, has limited warranties of title. It also has limited warranties against liens and encumbrances.
Limited Warranty of Title
With a Special Warranty Deed, if any problems arise after the deed is signed that affect the title or ownership of the property that were not listed as exceptions to tile in the deed, the Seller may have breached the warranty and may be sued by the Buyer, only if the problem arises “by, through, or under” the Seller.
With a Special Warranty Deed, generally, if the problem is not caused by the Seller, the Seller is not responsible for the problems to the title.
When Should you use a Special Warranty Deed
A Special Warranty Deed is often used by Sellers to limit their liability. Generally, Sellers prefer to sign General Warranty Deeds.
Common Special Warranty Deed Situations
Special Warranty Deeds are commonly used by builders and banks when they are transferring property. They are also common in commercial transactions.
From a Buyer’s perspective, a Special Warranty Deed should be acceptable if you know and trust your Seller, such as a family member, or if you have a title search or are receiving title insurance.
Note: With title insurance, the title company is guaranteeing the title. The exceptions will be listed in the title policy, so the Seller does not have to do so.
Good to know: Keep in mind that title insurance is just like any other insurance: it covers most problems, but not every problem. Read your title insurance policy carefully. It will have a standard list of “exceptions” from coverage that all title insurance policies have, and it will also have specific exceptions from coverage that apply only to your property.
Special Warranty Deeds in Divorce and Co-Ownership Transfers
A Special Warranty Deed is also commonly used when co-owners are transferring the property to each other, such as in a divorce or dissolution of a partnership. In these cases, since the transfer is from one owner to another owner, the owner receiving the deed should be familiar with the property and the condition of the title. In that case a Special Warranty Deed should be acceptable.
Note: A court order, such as a divorce decree, can also transfer title if the decree specifically describes the property. A Certified Copy of the Divorce Decree can be filed in the county property records to transfer title.
Examples of Deeds Without Warranties
Some transfers, such as tax sales and sheriff’s sales, convey property without any assurances regarding title, liens, or prior claims.
Tax Sale Deed
Consider a Tax Sale Deed. This deed will transfer property without any warranties. It is used when the owner fails to pay property taxes owed on the property. Usually at a public auction called a “Tax Sale.”
Sheriff’s Deed
Another deed with no warranty is a Sheriff’s Deed. This deed also transfers ownership, but without any warranties, at a public auction called a “Sheriff’s Sale.”
FAQ
What is the difference between a General Warranty Deed and a Special Warranty Deed in Texas?
The difference is the extent of the title warranties the Seller gives to the Buyer. A General Warranty Deed provides a full warranty of title for the entire history of the property. A Special Warranty Deed only warrants against title problems that arose during the Seller’s period of ownership. If a title problem existed before the Seller owned the property, the Seller is not responsible under a Special Warranty Deed.
Which is better for a buyer: General Warranty Deed or Special Warranty Deed?
A General Warranty Deed is better for Buyers because it provides the broadest title protection. With a General Warranty Deed, the Seller guarantees ownership and freedom from undisclosed liens or encumbrances for the entire history of the property, not just during the Seller’s ownership period. This gives Buyers maximum legal recourse if title problems arise later.
Does a Warranty Deed cover the condition of the house or just the title?
Warranty Deeds cover only the condition of the title to the property, not the physical condition of structures on the property. The warranty of title is separate from “AS IS” provisions, which address the physical condition of improvements. An “AS IS” clause means the Seller makes no promises to fix anything that breaks after closing, but this does not affect the warranty of title.
When should I use a Special Warranty Deed instead of a General Warranty Deed?
Special Warranty Deeds are commonly used when Sellers want to limit their liability, in commercial real estate transactions, by builders and banks transferring property, and when co-owners transfer property to each other such as in divorce or dissolution of a partnership. A Special Warranty Deed is acceptable for Buyers who know and trust the Seller, such as a family member, or when the Buyer is receiving title insurance.
Can a Seller be sued if there are title problems with a Warranty Deed?
Yes, if title problems arise that were not listed as exceptions in the deed, the Seller may have breached the warranty and may be sued. With a General Warranty Deed, the Seller can be sued for any title problems regardless of when they occurred. With a Special Warranty Deed, the Seller can only be sued if the problem arose “by, through, or under” the Seller during their period of ownership.
What does warranty of title mean in a deed?
Warranty of title means the Seller guarantees the Seller owns the property 100% and that no other person will claim the property. It also includes a warranty against liens and other encumbrances, meaning the Seller promises there are no judgments, tax liens, mortgages, leases, or other claims affecting the property except those specifically listed in the deed.
Do I need a General Warranty Deed if I have title insurance?
If you have title insurance, a Special Warranty Deed may be acceptable because the title company is guaranteeing the title instead of the Seller. However, keep in mind that title insurance has standard exceptions from coverage and specific exceptions that apply only to your property. Read your title insurance policy carefully, as it does not cover every possible title problem.
Which deed should I use to remove a name from a deed in Texas?
Either a Special Warranty Deed or a General Warranty Deed can be used to remove a name from a deed in Texas. Special Warranty Deeds are commonly used when co-owners are transferring property to each other, such as in divorce, because the owner receiving the deed should already be familiar with the property and the condition of the title.
Contact Us
If you have any questions, email attorney Scott Steinbach directly at scott@texaspropertydeeds.com.