Special warranty deed

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Special warranty deed

Amber Stevens
Newman, CA · Member since 2015 · 42 posts · 5 votes

I'm looking at a property up for auction on homesearch and it says buyer will receive a special warranty deed or equivalent. What is that?

Thanks!

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Joel OwensBusiness Member
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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
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General warranty deed means the property is guaranteed all the way through title.

Special warranty deed means they are guaranteeing for only the time the current seller selling it has owned it.

Quit claim deed is saying whatever interest I have in the property I am giving it to you.

Special warranty deed is common for pre-foreclosure, foreclosure, inherited type properties that are usually sold AS-IS.

You need to make sure a title policy will cover you under a special warranty deed versus the general.

No legal advice given. 

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
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    General warranty deed means the property is guaranteed all the way through title.

    Special warranty deed means they are guaranteeing for only the time the current seller selling it has owned it.

    Quit claim deed is saying whatever interest I have in the property I am giving it to you.

    Special warranty deed is common for pre-foreclosure, foreclosure, inherited type properties that are usually sold AS-IS.

    You need to make sure a title policy will cover you under a special warranty deed versus the general.

    No legal advice given. 

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  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
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    @Amber Stevens 

    SWD's are common and nothing to be concerned about as long as you have title insurance. 

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  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
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    @Amber Stevens Given that you are located in CA, warranty deeds are not used within our State (in my experiences). 

    Since you are a newer poster on BP and we don't know what geographic locals you are considering investing in, you just need to determine what is acceptable way to pass marketable (insurable) title where you're buying.

    In CA, grant deeds are the preferred instrument, as you may already may be damiliar with.

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  • Brett Russell
    Investor · Chelsea, MI · Member since 2013 · 350 posts · 138 votes
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    @Joel Owens

    @Guy Gimenez

    I'd like to ask a follow up question about this:  what do I have to do to make sure I can get title insurance on one of these properties?  With a traditional sale, it would happen during the due diligence phase and I could back out if it can't be provided.  With the auction, I don't have that liberty.  

    Say there are 5 properties I'm interested in, do I approach a title company about all 5 and have them do some sort of preliminary investigation before I even start bidding?  If so, what should I expect that service to cost me?

    I'm referring to MI properties if it matters.

    Thanks so much.

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  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
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    @Brett Russell

    I'm not versed in Michigan auction procedures or title company regulations, so I can't be of much help. Sorry.

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  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
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    Originally posted by :
    With the auction, I don't have that liberty.  

     The contract doesn't guarantee clear title at closing?

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  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
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    @J Scott

    @Brett Russell

    I assumed he was buying at the courthouse steps, not an online auction. Can you confirm Brett?

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
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    Homesearch does REO auctions. Title insurance will be provided, just make sure a search for UNrecorded liens is done.

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
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    Get a preliminary title commitment prior to the sale, might be free or $50, mine are free. The SWD usually excepts out their ownership period from the chain, they avoid responsibility of previous matters by removing themselves as owner in title. Title insurance will cover prior matters, look to Schedule BII of the ALTA Standard policy for the exceptions not covered by your policy. There are normal accepted exemptions, but read them and ask the title agent to explain if you have questions. Good luck :)

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  • Brett Russell
    Investor · Chelsea, MI · Member since 2013 · 350 posts · 138 votes
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    Thank you @Bill Gulley, I was referring to online auctions, as had the OP.

    Sounds like I just need to establish a good relationship with a title company to get preliminary title work done before bidding and I should be able to avoid any big title issues.

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  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
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    @Brett Russell

    Get a copy of the contract for the selling party.  The contract will state what rights the buyer has to object to certain exceptions to policy coverage. As long as the contract requires encumbrances to be resolved, you should be able to address any issues upon contracting.

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  • Cathy Lippert
    Cleveland/Akron Area · Member since 2015 · 9 posts · 2 votes
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    A followup question to this post... In the Hudzu P&S -- non-negotiable by the way -- they only agree to provide insurable title, not marketable title. They appear to have no obligation to cure title defects, but only to show that someone (their own title company themselves, owned by the same parent) will insure me against them. I will be getting a Special Warranty deed.

    1) Am I correct in understanding that if I get the proper title insurance (extended) to cover unrecorded leins and the like, my interest will be protected from clouds in the title that occurred prior to bank's foreclosure on the property?  WIll this be as good as getting a regualr Warranty Deed?

    2) If I turn around and try to sell the property, I would expect the buyer to insist on a Warranty Deed from me the seller.  If I am only getting a Special Warranty Deed myself, would I be taking on extra risk by agreeing to provide a regular Warranty Deed to the buyer?

    Thanks!

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  • Jamila Williams
    Investor · Chicago, IL · Member since 2016 · 24 posts · 2 votes
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    yes I am interested in the answer to @Cathy Lippert's question because I am in the same situation now

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  • Scott Schultz
    Rental Property Investor · West Bend, WI · Member since 2015 · 931 posts · 598 votes
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    in many cases the auction sites like Homesearch, H&M, Auction.com, Hubzu, XOME, and the like are selling prior to and insurance pay out, but after legal foreclosure, at which time title may not yet be quieted, i find in most cases it is, but they just cover themselves in case they miss something, and lay it on the buyer, thats why you get a discount on the property. 

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