When a deed is used to transfer real estate, the deed must identify whether the deed includes a warranty of title and, if so, the extent of the warranty. This article explains warranties of title and gives you the background you need to choose the right warranty for your deed.
What is a Warranty of Title?
A warranty of title is a guarantee about the current owner’s interest in the property. A warranty of title assures the recipient that the transferor owns the property and has the right to transfer it to the recipient.
The types of warranties can differ from state to state. In California, there are three types of deeds, each with different warranties of title. The three types of deeds are Warranty Deeds, Grant Deeds, and Quitclaim Deeds.
California Warranty Deeds
A California Warranty Deed provides a full warranty of title and is the most favorable to the recipient. By signing a Warranty Deed, the transferor makes an absolute guarantee that the transferor owns the property, has the right to convey it, and will defend title against anyone that asserts a claim against the property.
In California, the warranties of title provided by a Warranty Deed have largely been replaced by title insurance. Because title insurance protects against the same risks covered by a Warranty Deed, most property owners prefer to rely on title insurance instead of the warranties in a Warranty Deed. But Warranty Deeds are still used in some transactions—particularly commercial real estate transfers—when the buyer wants a guarantee from the seller that the seller owns and has clear title to the real estate being transferred.
When to Use California Warranty Deeds
You might want to create a California Warranty Deed if:
- The deed is transferring title to commercial (non-residential) property;
- The buyer is paying consideration for the property (i.e., the transfer of the property is not a gift) and wants assurance about the seller’s title to the property; or
- The buyer does not intend to purchase title insurance.
California Grant Deeds
Grant Deeds are similar to Warranty Deeds in that they provide the recipient with assurance that the current owner (transferor) has title to the property. But the warranty provided by a Grant Deed is more limited than the warranty provided by a Warranty Deed. A Grant Deed only guarantees that the transferor has done nothing to cause a title defect while the owned the property. The Grant Deed makes no guarantees about what may have happened before the transferor acquired the property.
In other states, Grant Deeds are sometimes referred to as Statutory Warranty Deeds or Special Warranty Deeds. See our discussion of California Grant Deed forms for more information about California Grant Deeds.
When to Use California Grant Deeds
A California Grant Deed is a middle-ground alternative that is very popular in California. Grant Deeds are often used in the following contexts:
- The transferor is transferring property to or from a trust or business;
- The transferor is making an outright transfer to a non-family member;
- The deed adds or removes a co-owner; or
- The deed changes the form of co-ownership.
Note that you would not want to use a Grant Deed if the transferor is unsure whether he or she has done anything that might cause a title defect. In that situation, a Quitclaim Deed (discussed below) could be a better choice.
California Quitclaim Deeds
Unlike both Warranty Deeds and Grant Deeds, Quitclaim Deeds do not make any warranties at all about title to the property. A person who signs a Quitclaim Deed transfers whatever title he or she has in the property, but makes no guarantees about whether he or she actually owns the property. If it turns out that the transferor did not have good title—or even if the transferor had no interest in the property at all—there is nothing that the recipient can do. The recipient receives nothing.
Because Quitclaim Deeds provide no warranty of title, they are most often used when title to the property is uncertain and the transferor is not comfortable making any guarantees about the property. They are also used to remove one spouse from the property to that the other spouse can transfer the property without spousal consent. See our discussion of California Quitclaim Deeds for more information about Quitclaim Deeds.
When to Use California Quitclaim Deeds
You may want to use a Quitclaim Deed if:
- The deed is a gift of the property and the transferor is not comfortable with a warranty;
- You want to remove one spouse from the property so that the other spouse can deal with the property without spousal involvement;
- The transferor is not certain that he or she actually owns the property; or
- The purpose of the deed is to remove someone’s name or make it clear that the person doesn’t have an interest in the property.