A Grantor can provide a Grantee with varying degrees of assurances regarding the ability of third parties to make a claim of ownership with respect to the subject property. These assurances, or the lack thereof, are written into deeds as warranties and covenants, which should be fully understood before finalizing a real estate transaction.
General Warranty Deeds
A general warranty represents the broadest assurances by the Grantor to the Grantee, as it relates to the interest conveyed. It is, therefore, the warranty most commonly used in connection with residential real estate sales because buyers (and the banks that provide their financing) want the most comprehensive protection possible from third-party claims on the subject property. General warranty deeds should always be supported by a thorough title examination because grantors who extend this kind of assurance become legally required to defend the property title against all other claims and compensate the grantee for any unresolved claims against the property. This type of warranty is typically written into deeds with language indicating that the conveyance is made “with general warranty.”
English Covenants of Title are most commonly associated with General Warranty Deeds and provide assurances that the Grantor has the right to convey the subject property, that the Grantee shall have quiet enjoyment of the property free from encumbrances, and that the Grantor has not, himself or herself, encumbered the property. Language in a deed stating that the conveyance is made “with English covenants of title” provides these assurances to the Grantee.
Special Warranty Deeds
Special warranties are more limited than general warranties and are often used by business entities and fiduciaries to provide some assurances with respect to the status of the title without having unlimited liability. Somewhat counterintuitively, special warranties actually provide fewer buyer protections than general warranties. Deeds with special warranties are, therefore, most common in the world of commercial real estate where grantors often only want to provide assurances against title defects that might have arisen during their ownership. At bottom, special warranties do not provide assurances with respect to all third-party claims, but, instead, represent a commitment that the Grantor will defend the Grantee against any claims of ownership by the Grantor and his or her heirs and personal representatives. A conveyance made “with special warranty” contemplates these terms.
In a Quitclaim Deed, a Grantor conveys his or her interest, if any, in real property to a Grantee without any warranties or covenants. This type of deed is uncommon in residential real estate transactions that involve actual consideration because, in the absence of assurances from the Grantor, title companies will be reluctant to insure title to the property against claims by third parties. Quitclaim deeds are, therefore, common in conveyances between family members and, in particular, can be a cost-effective tool for spouses in divorce proceedings who wish to transfer an interest in marital real estate.
The warranties and covenants stated in a given deed largely define the rights and responsibilities of both the Grantor and the Grantee, with respect to third party claims. Understanding these aspects of a deed is a must before you get too far into any real estate transaction. Contact the attorneys at Keithley Law, PLLC, PLLC in Fairfax at (703) 454-5147 to schedule an initial consultation to discuss a deed that you need drafted properly or the interpretation of an existing deed. We look forward to helping you.