FLORIDA DEEDS PART II – Special Warranty Deeds are not as “special” as you may think.

Last week, we discussed the three most common types of deeds used in Florida when buying or selling a home.  I also explained the “warranties” that are the inherent protections which are embedded in a General Warranty Deed and why these protections make it the preferred deed to use when purchasing real estate. This week we will examine the effects of transferring title to real estate by Special Warranty Deed. Before we begin, bear in mind that when buying or selling a home, know what type of deed will be used in the transaction and verify its inclusion in any purchase or sale agreement.

Special Warranty Deed (SWD)

Generally, a SWD merely warrants that the grantor (seller) hasn’t done anything to render title defective during the grantors tenure of ownership. Contrast that with last weeks discussion, a GWD warrants not only the present seller, but every other grantor in the chain of title.

A typical SWD would expressly state what warranties were being conveyed with the property. In practice, a SWD often conveys the same warranties as a General Warranty Deed (GWD) with the important exception that it is only warranting against defects by the present seller. This is important because if a “cloud” or “defect” is discovered, a SWD precludes the buyer from having any recourse against other previous grantors in the chain of title.

So, when a SWD is used, it means that the seller is only guaranteeing that they have done nothing to cause a “cloud” on the title or to make title unmarketable; the seller is not “warranting” anything that may have occurred prior to the seller coming into ownership.  The next time you hear about a Special Warranty Deed, remember that there is really nothing “special” about it.

When To Accept a Special Warranty Deed

To limit potential liability, SWD’s are frequently used by those acting in some type of fiduciary capacity. These typically include: Guardians, Personal Representatives, and Bankruptcy Trustees. Foreclosure property is another timely example where you would often see SWD’s being used. Because the foreclosing bank doesn’t have a close relationship to the property, they generally will not guarantee the condition of title before they acquired the property through foreclosure.

What To Look For

Below is an example of the pertinent language to look for in a Special Warranty Deed. Always use the title of the deed as a starting point for your inquiry, but if you see language similar to the language below, than you should speak with an attorney to discuss your options before signing anything.

TO HAVE AND TO HOLD, the same in fee simple forever.      

            AND the Grantor hereby covenants with the Grantee that the Grantor is lawfully

            seized of said land in fee simple; that the Grantor has good right and lawful

            authority to sell and convey this land; that the Grantor hereby specially warrants

            that title to the land is free from all encumbrances made by Grantor, and Grantor

            will defend the same against the lawful claims of all persons claiming by, through,

            or under Grantor, but against none other. (emphasis added)

The information provided in this article is general in nature and is not tailored for any particular set of facts. If you are buying or selling a home in Florida, you should seek the advice of legal counsel.  If you have any questions or comments, or possible suggestions for upcoming topics, please comment below or contact the author at GuirguisLaw@gmail.com.

Posted on May 2, 2012, in Legal and tagged , , , , , , , , , , , , , , . Bookmark the permalink. 1 Comment.

  1. When a bank sells (REO) and they are using a special warranty deed and a title company finds outstanding hoa liens from person they foreclosed on, is this going to be the buyers responsibility to pay at closing or the sellers? This is for Florida Property

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