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Warranty Deed

A warranty deed is a legal document used for real estate title transfer. In essence, real estate warranty deeds guarantee the property has a clean title and no creditor or tax liens or judgments are attached. Two types of warranty deeds are used in real estate transactions - General Warranty Deed and Special or Limited Warranty Deed.

A General Warranty Deed is used to guarantee that the Grantor (seller) legally owns the property and is authorized to sell it. The deed protects the Grantee (buyer) in the event of non-disclosure. This could include discovering someone else owns interest in the real estate or when tax liens, mortgage claims or judgments are not reported during the sale of property.

General warranty deeds include six covenants (binding agreements) which are divided into two categories - present and future. Since general warranties extend back to the property's origins, the Seller is subject to potential lawsuits if it is discovered the real estate title is invalid.

Present Covenants include: Covenant of Seisin, Covenant of Right to Convey, and Covenant against Encumbrances. Together, these three covenants comprise a promise which claims the Grantor holds right of possession; the title is clean; and the property is free of liens or judgments.

Future Covenants include: Covenant of Warranty, Covenant of Quiet Enjoyment, and Covenant of Further Assurances. The first two covenants elicit the Grantor's promise to protect the Grantee against future property title claims. The later covenant covers the buyer in the event the seller omits vital information required to pass a valid title.

A Special or Limited Warranty Deed offers limited protection to the Grantee. While the General Warranty Deed extends to the property origins, the limited warranty deed only applies to the time period during which the Grantor owned the property.

In the event problems arise with the property after the sell, the special warranty deed allows the Grantee to seek compensation from the Grantor to fix said problems. However, the Grantee must be able to prove the problems existed during the time in which the Grantor owned the real estate.

In order for the Warranty Deed to be legally binding, it must be executed according to state laws where the property is located and recorded at the County Recorder's office. Certain time constraints apply; therefore it is imperative to understand real estate laws surrounding property which is being purchased.

Most buyers engage in a property title search as part of their due diligence. When engaging in seller carry back financing, rent-to-own, for sale by owner, or "Subject To" real estate transactions, it is important to work with a qualified real estate attorney to ensure all documents are valid and legally binding.

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