How Alabama Statutory Warranty Deed Forms Work
An Alabama statutory warranty deed form provides a limited warranty to the person receiving the property. The distinguishing feature of a statutory warranty deed is the limitation of the warranty to the period when the prior owner owned the property.
Other Names for Alabama Statutory Warranty Deeds
In most states, deeds that convey real estate with a limited warranty are called special warranty deeds. Even in Alabama, the terms statutory warranty deed and special warranty deed are sometimes used interchangeably. But most professionals prefer the term statutory warranty deed because it reflects the fact that this form of deed is expressly authorized by Alabama statute (Ala. Code § 35-4-271).
In other states, deeds that convey a limited warranty may also be called other names. In California, for example, a grant deed roughly equals an Alabama statutory warranty deed. Similarly, in Michigan, a covenant deed is almost the same as an Alabama statutory warranty deed.
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Relationship of Statutory Warranty Deed Form to Warranty of Title
Key Term: Warranty of Title. Title issues can be caused by many things, including errors in the public record, unknown liens against the property, undisclosed prior conveyances, forged deeds, missing heirs or unprobated wills, or disputes about boundary lines or surveys. Title issues often require legal action to fix and can decrease the value of real estate. If the property has no title issues, it is said to have clear title. A warranty of title is a legal guarantee from the transferor to the transferee that there are no title issues. If a deed makes a warranty of title, the transferee can sue the transferor over any title issues.
Designating a deed as a statutory warranty deed or special warranty deed says something about the warranty of title provided by the deed. As discussed below, the term is used to distinguish statutory warranty deeds from other deeds that provide different warranties of title.
When a person transfers property by statutory warranty deed, he guarantees that he has done nothing that would cause any problems with title to the property. He makes no promises about what may have happened before he owned the property. This warranty guarantees that the transferring owner holds a full (fee simple) interest in the property that is free from any mortgages, liens, or other title issues that could affect the value of the property (encumbrances). But the extent of this warranty is limited to the period when the person signing the deed owned the property. He or she is not responsible for issues that arose before he or she owned the property.
A statutory warranty deed protects the new owner of the property by providing legal rights against the prior owner of the property. This protection has been supplemented—and sometimes replaced—by the increased popularity of title insurance to manage risk. Title insurance shifts the risk of title issues to the insurance company.
Comparison of Alabama Statutory Warranty Deeds to Other Forms of Alabama Deeds
A statutory warranty deed can be thought of as a middle ground between two other forms of Alabama deeds: Quitclaim deeds and general warranty deeds:
- An Alabama quitclaim deed form provides no warranty of title. It simply transfers whatever interest the person signing the deed owns at the time. This differs from a statutory warranty deed, which provides a limited warranty of title.
- An Alabama general warranty deed provides a full warranty of title that protects against all title issues, even those that relate to the time before the prior owner owned the property. A statutory warranty deed, in contrast, limits the warranty to the period when the person signing the deed owned the property.
The term special warranty deed relates specifically to the warranty of title provided by the deed. Other deeds go by different names that aren’t linked to the warranty of title. For example, an Alabama life estate deed can avoid probate. Because that feature (probate avoidance) differs from the distinguishing feature of a statutory warranty deed (warranty of title), the same deed can be both a life estate deed and a statutory warranty deed.
Common Uses of Statutory Warranty Deeds
Statutory warranty deeds may be the most common form of deed in Alabama. Some real estate professionals believe that a quitclaim deed does not transfer property as much as release an interest in the property. A statutory warranty deed form clearly conveys the property to the new owner, so some people prefer it over a quitclaim deed.
Statutory warranty deeds are often used when someone wants to convey property to a living trust or an LLC that he or she will own, control, or benefit from in the future. Because the transferring owner is only responsible for the period when she owned the property, and because she will continue to control or benefit from the trust or LLC, there is little risk to using a statutory warranty deed. Statutory warranty deeds can provide continuity of title insurance coverage in this context.
How to Create an Alabama Statutory Warranty Deed
As the name suggests, Alabama statutory warranty deeds are authorized by statute (Ala. Code § 35-4-271). The statute is confusingly worded but states that using specified terms like grant, bargain, and sell have specific legal consequences. These words trigger the implied warranties of title associated with a statutory warranty deed unless the body of the deed contains contrary provisions that identify the deed as a general warranty deed.
In addition to the specific language that must be included to create an implied warranty—and the language that must be excluded to avoid creating a general warranty—the deed must meet all other requirements of Alabama law and should meet customary practice of Alabama real estate professionals. Common elements include a valid legal description, a statement of consideration, properly worded acknowledgments in the Alabama format, and margin, font, and page size requirements. If multiple owners are involved, the deed should also state the manner in which co-owners will hold title.
Confused? Don’t worry. Our software simplifies the process. It walks you through a guided interview process and automatically includes the language needed to create the type of deed that matches your choices.
Failure to meet the requirements of Alabama law can cause a defective deed. Possible defects include an invalid transfer or a valid transfer that contains a different warranty than was intended. It is also important to be sure that the language is consistent. Inconsistent language in the deed can require a lawsuit or other legal work to fix problems with the improperly prepared deed. The deeds created by our Deed Generator include the special language and formatting required to create a valid Alabama statutory warranty deed.