- To transfer property to a trust—like a living trust—that the transferor controls or benefits from;
- To transfer property to a business—like a limited liability company—that the transferor owns;
- For sales of commercial or multi-family residential property;
- To transfer property to a new owner that is purchasing title insurance on the property and is not concerned with the limited warranty of title; or
- In other circumstances where the current owner does not want to be legally responsible for problems with title that arose before the current owner owned the property.
A special warranty deed requires special language to ensure that the deed qualifies as a special warranty deed. This language is automatically included by our deed preparation service and valid in all Illinois counties.
How an Illinois Special Warranty Deed Works
An Illinois special warranty deed form is a type of deed used to transfer property with a limited warranty of title.
Other Names for Illinois Special Warranty Deeds
States differ in the name used for deeds that provide a limited warranty of title. In some states, like California, a special warranty deed known as a grant deed. In other states, like Michigan, a special warranty deed is known as a covenant deed. And yet in other states, like Alabama, a special warranty deed is called a statutory warranty deed. Although the names are different, the deed is essentially the same. In each case, these deeds provide a limited warranty of title.
Relationship of Special Warranty Deed Form to Warranty of Title
The warranty of title given by a special warranty deed is limited. A person who signs a special warranty deed promises:
- That the current owner owns the real estate being transferred;
- That the current owner is legally responsible for all problems with title that relate to the period when the current owner owned the property;
- That the new owner will be able to enjoy and use the real estate in the future and will not be interrupted by the new owner (quiet enjoyment); and
- If it turns out that the current owner does not own the property but later gets title to it, that title will automatically transfer to the new owner (after-acquired title).
If it turns out that any of these promises are false, the new owner may sue the previous owner for breaking the promise.
The warranty provided by a special warranty deed is limited to the time that the current owner owned the property When the current owner signs a special warranty deed transferring property to a new owner, the current owner is saying “I have not done anything that will cause any title problems with the property. I make no promises about what anyone else did before I owned the property.” This means that the special warranty of title provides no guarantees about previous owners in the chain of title.
Most sales of real estate require title insurance, especially if a lender is involved. Title insurance protection supplements—and in some cases replace—the protection offered by a special warranty deed.
Comparison of Illinois Special Warranty Deeds to Other Forms of Illinois Deeds
An Illinois special warranty deed form differs from both a quit claim deed form and a general warranty deed form.
- An Illinois general warranty deed form includes full covenants of title that extend to all previous owners of the property. A special warranty deed form, by contrast, limits the current owner’s liability to the period when the current owner owned the property.
- Unlike an Illinois quit claim deed form, which provides no warranty of title, an Illinois special warranty deed form provides a warranty of title.
By providing a limited warranty of title, an Illinois special warranty deed form provides a middle ground between these two extremes.
Common Uses of Special Warranty Deeds
Special warranty deeds are the most common deed forms for sales of commercial and multi-unit residential real estate. It is rarely used to transfer single-family residences; general warranty deeds are used instead.
Special warranty deeds are also used by businesses (like limited liability companies) that want to avoid the liability associated with a general warranty deed. The special warranty deed allows the business to limit its responsibility to the period during which the business held title to the property. The business is not responsible for any title issues that arose before the business acquired the property.
Special warranty deeds are also used by trusts, including living trusts. When a trustee of a living trust receives title to Illinois real estate, the trustee holds that title for the benefit of the trust beneficiaries. Because the trustee is acting on behalf of the beneficiaries, the trustee may not want to be liable if it turns out that there is a title issue that was not the fault of the trustee. A special warranty deed form protects the trustee in these circumstances.
Special warranty deeds may also help ensure continuity of title insurance following a transfer to a living trust or LLC.
How to Create an Illinois Special Warranty Deed
Unlike other forms of Illinois deeds, the Illinois statutes do not contain a statutory format for special warranty deed forms. Special warranty deeds are created by including language that “conveys and warrants” the property to the new owner, then describing the warranty in the body of the document.
The most common form of limited warranty—and the one included by our software—limits the transferor’s responsibility to the period when the transferor owned the property. Although the exact language can differ, the warranty portion of deed usually contains language similar to:
Grantors fully warrant Grantors and Grantors’ heirs and successors to warrant and forever defend all and singular the Property to Grantee and Grantee’s heirs, successors, and assigns against every person whomsoever lawfully claiming or to claim the same or any part thereof, except as to reservations and exceptions described herein, when the claim is by, through, or under Grantors, but not otherwise.
By covering only claims that arise under the transferor (Grantor) of the property, this warranty protects the transferor from claims that arose before the transferor acquired title.
In addition to the special warranty language, the deed should include other requirements like a valid legal description, statement of consideration, and a description of the manner in which co-owners will hold title, font size and page format requirements, and signature and notarization requirements. Each of these elements is important and should be properly worded.
It is important for the special warranty deed to contain the correct language. Seemingly minor differences can, in the best-case scenario, result in a different deed than you intend. In the worst-case scenario, the deed could have inconsistent provisions that require a lawsuit or other court action to clarify. The deeds created by our Deed Generator include the language needed to ensure that the deed meets the legal requirements for validity and recording in all Illinois counties.