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Warranty Deed

A warranty deed used with real estate transfers guarantees the property has a clean title with no liens attached. Liens are used when borrowers default on creditor loans, owe taxes to the Internal Revenue Service, or have outstanding child support or alimony payments. There are two types of real estate warranty deeds - General or Limited.

A general warranty deed guarantees the seller owns the real estate and has authority to sell it. General warranty deeds protect the buyer if the seller engages in non-disclosure. This might include not reporting creditor or tax liens or judgments not reported by the seller.

A limited warranty deed limits protection to the buyer. While a general warranty deed covers the property from its origins, a limited warranty deed is only applicable to the period of time which the seller owned the real estate.

If problems occur after the property sale, the limited warranty deed allows the buyer to persue the seller for compensation to fix the problems. However, the buyer is required to provide evidence that the problems existed during the time period which the seller owned the property. Obviously, this can be challenging to prove. Therefore, real estate experts recommend obtaining a general warranty deed when possible.

In order to be valid, warranty deeds must adhere to state laws where real estate is located and recorded through the County Recorder's office. It is important to adhere to realty laws and time constraints when purchasing real estate. Otherwise, buyers lose protection of the deeds and will be unable to legally pursue the seller should problems arise.

General warranty deeds are composed of six covenants or binding agreements. The covenants fall into the category of either present or future. General warranty deeds extend to the origin of the property regardless of how many individuals have owned the property. If the buyer discovers the real estate title is invalid, he can initiate legal proceedings against the seller for non-disclosure, along with reimbursement for repairs, court fees, lien removals or other damages.

Present covenants of general warranty deeds include: Covenant of Seisin, Covenant of Right to Convey, and Covenant against Encumbrances. In essence, present covenants claim the seller holds rights of possession to the property and that the property title is clean and is free of judgments or liens.

Future covenants of general warranty deeds include: Covenant of Warranty, Covenant of Quiet Enjoyment, and Covenant of Further Assurances. The first two bring forth a promise from the seller to protect the buyer from future property title claims. The later provides protection to the buyer in the event the seller fails to disclose required information to pass a valid title.

When purchasing real estate properties it is imperative for buyers to engage in due diligence to ensure no liens or judgments are attached and the seller holds legal title. This is particularly important when buyers engage in creative financing techniques such as seller carry back mortgages, lease-to-own, for sale by owner, or Subject To.

We invite you to learn more about the various options available for buying and selling real estate in our warranty deed article library.

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Published on October 30, 2009 at 01:36 AM

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