New Mexico Special Warranty Deed Form
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What Is a New Mexico Special Warranty Deed Form?
A special warranty deed is a type of legal document used to transfer New Mexico real estate from one person to another.1 In a special warranty deed, the seller, also known as the grantor, transfers the property with special warranty covenants.2 That means the seller guarantees the property’s title against issues that occurred during the time the seller owned the property.3 The seller is not responsible for any issues that occurred before the seller’s ownership of the property.
Unlike a general warranty deed, a special warranty deed does not provide a complete warranty of title. In other words, the grantor is not guaranteeing that the title is free and clear of defects, liens, or encumbrances that may have existed before he or she acquired the property. Instead, the grantor guarantees that he or she has done nothing to impair the property’s title and promises to defend the new owner’s title against any third-party claims that arose while the grantor held title.
What Is Warranty of Title?
A warranty of title is a promise or guarantee made by the seller of real estate. In New Mexico, a seller who provides a complete warranty of title guarantees that:
- The seller owns clear and marketable title to the property;
- The seller has the right to sell and transfer the property to the new owner;
- There are no undisclosed liens, taxes, assessments, or other adverse third-party interests (encumbrances) on the property’s title; and
- The seller will defend the new owner’s title against any claims made by third parties.4
New Mexico special warranty deeds transfer property with a limited warranty. The seller promises that he or she has done nothing to cause any problems with the property’s title. The seller also agrees to defend the property’s title against third-party claims, but only if the claim is derived from the seller’s ownership of the property.5 The limited warranty does not cover any title problems that arose before the seller acquired the property.
A warranty of title protects the new owner by placing the financial risk of title problems on the seller who provided the warranty. If a title problem arises that is covered by the warranty, the seller must correct the problem, or the new owner can sue the seller to recover any financial damages that the title issue causes.6
Other Names for a New Mexico Special Warranty Deed Form
New Mexico uses the term special warranty deed for deeds that transfer real estate with a limited warranty. Special warranty deed is also the most common name for this type of deed in other states, but some states use other names. Alternate names for deeds that provide a limited warranty include:
- Limited warranty deed (used in Ohio and Kansas);
- Statutory warranty deed (used in Alabama);
- Grant deed (used in California); and
- Covenant deed (used in Michigan).
A handful of states—like Nevada, New York, and Washington—use bargain and sale deeds that transfer real estate with a limit warranty. However, bargain and sale deeds do not provide a warranty in every state that uses them.
How Do New Mexico Special Warranty Deed Forms Relate to Other Forms of Deeds?
In New Mexico, there are several different types of deeds that can be used to transfer real estate ownership. Along with special warranty deeds, the most common New Mexico deeds are warranty deeds and quitclaim deeds.
- New Mexico warranty deed form. A warranty deed form in New Mexico provides the buyer with the strongest guarantee of a good title. The seller (or grantor) who signs a New Mexico warranty deed guarantees that the new owner will receive legal ownership of the property, free of any liens or other third-party interests (except as specifically disclosed in the deed).8 The seller promises the defend the title against any and all claims that arose at any point in the property’s ownership history—even claims from before the seller took title.
- New Mexico quitclaim deed form. A New Mexico quitclaim deed form provides the new owner no warranty of title. The grantor who signs a quitclaim deed transfers whatever ownership interest he or she has (if any) but makes no promises about the validity or quality of the title.9 The new owner receives whatever interest the grantor can legally transfer and has no legal recourse under the quitclaim deed if there are problems with the property’s title.
A special warranty deed provides a buyer less protection than a warranty deed and places less risk on the seller. On the other hand, a special warranty deed provides a buyer more protection than a quitclaim deed and places greater risk on the seller.
New Mexico Title Insurance and Special Warranty Deeds
Title insurance protects real estate owners and lenders against financial losses resulting from defects in the title to a property. In New Mexico, title insurance is typically purchased by the buyer at the time of closing, and it is often required by lenders as a condition of financing. When a buyer purchases title insurance, the title insurance company will conduct a thorough search of public records to identify any liens, encumbrances, or other defects in the title. If any issues are discovered, the title insurance company will work to resolve them before issuing the policy.
Title insurance can provide additional protection to a buyer who takes title under a New Mexico special warranty deed. A special warranty deed only provides a limited warranty of title that covers issues while the seller owned the property. Title insurance covers title problems that may have existed prior to the seller’s ownership of the property.
New Mexico Special Warranty Deed Forms and New Mexico Estate Planning Deeds
In New Mexico, there are two types of deeds used in estate planning to avoid probate.
- New Mexico life estate deed. A life estate deed allows a property owner to keep a lifetime ownership interest (a life estate) and transfer the right to future ownership of the property to another person (the remainderman or remainder beneficiary). When the current owner dies, the property passes to the remainder beneficiary automatically, with no need for probate. An owner who creates a life estate deed can transfer complete title to the property only with the remainder beneficiary’s consent.
- Transfer-on-death deed (TOD deed). A New Mexico transfer-on-death deed form, also known as a TOD deed or a beneficiary deed, allows an owner to name a beneficiary who will take title effect upon the owner’s death.10 While living, the owner retains the right to sell, mortgage, or transfer the property and also has the right to amend or revoke the TOD deed.11 When the owner dies, title passes directly to the beneficiary, without probate.
A life estate deed may also be a special warranty deed if it transfers the property with a limited warranty of title. However, New Mexico TOD deeds always transfer property with no warranty of title (even if the deed says otherwise), so a TOD deed can never be a special warranty deed.12
Common Uses of New Mexico Special Warranty Deed Forms
A New Mexico special warranty deed is commonly used in real estate transactions where the seller (grantor) wants to provide some level of protection to the buyer (grantee) against defects in the title, but the seller does not want to provide the comprehensive warranty of title of a general warranty deed. Special warranty deeds are often used in situations where the seller has owned the property for a relatively short period of time, or where the seller is not fully familiar with the history of the property’s ownership. A special warranty deed is also a common choice in commercial real estate transactions, where the buyer may be more familiar with the risks involved in purchasing the property.
Fiduciaries like executors of estates and trustees often prefer special warranty deeds, also. Fiduciaries may lack the knowledge or authority to offer a complete warranty that covers the property’s entire chain of title.
How to Create a New Mexico Special Warranty Deed
As with any deed, a New Mexico special warranty deed should be customized to reflect the specific terms and conditions of the transaction and the requirements of New Mexico law. Reliance on fill-in-the-blank forms can lead to invalid documents and future title issues.
A New Mexico special warranty deed must be in writing, signed by the grantor, and acknowledged before a notary public or other authorized officer. The deed must also include a legal description of the property being transferred and have language indicating that the grantor is conveying the property with a special warranty of title. A New Mexico deed that transfers property “with special warranty covenants” is considered a special warranty deed.13
Once the special warranty deed is executed, it should be recorded in the county clerk’s office of the county where the property is located. Recording provides public notice of the transfer of ownership. Recording also helps protect the buyer’s ownership interest in the property and provides a clear record of the transfer of ownership in the event of any future disputes.
Need a special warranty deed that meets New Mexico recording requirements?
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- See N.M.S.A. § 47-1-44(5).
- N.M. Stat. § 47-1-31.
- N.M. Stat. § 47-1-38.
- N.M. Stat. § 47-1-37.
- N.M. Stat. § 47-1-38.
- Garcia v. Herrera, 959 P.2d 533, (N.M. 1998).
- N.M. Stat. § 47-1-14.
- N.M. Stat. § 47-1-37.
- N.M. Stat. § 47-1-30.
- N.M. Stat. § 45-6-405.
- N.M. Stat. § 45-6-412.
- N.M. Stat. § 45-6-413(D).
- N.M. Stat. § 47-1-38.