Typically, when a seller conveys title to a purchaser, the seller executes a general Warranty Deed transferring all of their interests in the property. The seller is “warranting” to the buyer that the seller has good and marketable title to the property. Thus, if a title issue later arises involving a claim against the title that occurred at anytime prior to the sale, the purchaser can seek recourse against the seller through this Warranty Deed.
Today, many purchasers are buying foreclosed property wherein the seller (bank) only agrees to execute a Limited (or Special) Warranty Deed. Here, the seller is still conveying all of their interests in the property to the Purchaser. However, the seller is only “warranting” title to the purchaser for any claims against the title that occurred during the time that the seller (bank) actually owned the property. Thus, the seller is not responsible or liable for any claims that may have occurred prior to the seller taking title to the property. Many times, the bank only owned the property for a matter of months before reselling the property to a purchaser.
In any event, regardless of whether the seller executes a general or limited warranty deed, the purchaser can still obtain at closing an owner’s title insurance policy that protects against title claims that occurred anytime prior to the purchaser taking title. Therefore, as long as a purchaser obtains owner’s title insurance (which is strongly recommended in every transaction), the use of a general Warranty Deed versus a Limited Warranty Deed will have little or no impact on a purchaser down the road.
Brent Warren is a partner in the law firm of McLain & Merritt, P.C., a mid-size firm that has been in business over fifty years. He has been practicing law since 1992 and specializes in both residential and commercial real estate. Brent is a graduate of Vanderbilt University School of Law and the University of Kentucky (B.S. Accounting). His clients include real estate agents, loan officers, builders, developers and relocation companies. He lives and works in Alpharetta, Georgia. firstname.lastname@example.org
Van Purser and his wife Jeanne are a licensed Real Estate Brokers in Georgia. Since1984 they successfully purchased and renovated over 400 homes. Their expertise is in representing Buyers or Sellers as an advocate; which means always ensuring their best interest. Additionally, they represented hundreds of clients over the years as an Associate Broker with Metro Brokers, RE/Max and now with his own firm. He and his wife, Jeanne, have been married since 1977. Van or Jeanne can be reached at 770-623-3313, or by email at email@example.com or firstname.lastname@example.org.