What Are Warranties of Title?
Warranties of title are guarantees regarding the current owner’s title to the property being transferred. Depending on the deed form, the deed may or may not guarantee that the current owner has clear title to the real estate. The types of guarantees regarding clear title are called “title warranties” or “warranties of title.” A Warranty Deed, Quitclaim Deed, and Special Warranty Deed each have different title warranties.
The warranties of title depend on special language that is included in the body of the deed. Failure to include the correct language may result in a different title warranty than the parties intend. And if the warranty of title in the body of the deed doesn’t match the title of the deed, you may be creating a title issue that requires a court proceeding to address.
The three most common deed forms are Quitclaim Deeds, Warranty Deeds, and Special Warranty Deeds. The difference between these types of deeds has to do with warranties of title.
- Quitclaim Deed – A Quitclaim Deed (sometimes erroneously referred to as a Quit Claim Deed or Quick Claim Deed) makes no warranties of title at all. A Quitclaim Deed will transfer whatever title that the current owner has, but the owner does not warrant that the owner has clear title. Quitclaim Deeds are often used for transfers where no money changes hands, such as transfers to family members or pursuant to a divorce decree. In Texas, a Deed Without Warranty is often used as an alternative to a Quitclaim Deed.
- Grant Deed, Covenant Deed, Statutory Warranty Deed, or Special Warranty Deed – These deeds may be referred to as either Grant Deeds, Covenant Deeds, Statutory Warranty Deeds or Special Warranty Deeds, depending on the state. Regardless of the title, these deeds guarantee that the current owner has not done anything to cause a title problem, but makes no guarantee about what may have happened before the current owner acquired the property.
- Warranty Deed – With a Warranty Deed, the current owner guarantees that he or she has clear title, without any limitations. The current owner warrants that title is clear from all claims, even those that arose before the current owner acquired the property. Warranty Deeds are most often used in sales to unrelated buyers.
A Life Estate Deed (including a Florida Lady Bird Deed or a Texas Lady Bird Deed) is a type of deed that divides ownership between future categories of owners. Whether or not a deed qualifies as a Life Estate Deed or Lady Bird deed is a separate issue from the warranty of title used on the deed. For example, a Life Estate Deed may be either a Warranty Deed, Special/Statutory Warranty Deed, or Quitclaim Deed, depending on the warranty of title.
In most situations, you can decide whether to include a warranty of title and the extent of that warranty. But this is not always the case. Transfer-On-Death Deeds (known in some states as Beneficiary Deeds) do not include a warranty of title even if the deed says otherwise. Both the California Revocable Transfer-On-Death Deed statute and the Texas Transfer-On-Death Deed statute clearly provide that the person who inherits property by Transfer-On-Death Deed receives no warranty of title, even if the deed has language that appears to grant a warranty of title.