Question: one house was bought under special warranty deed, does it mean that the house will have to be sold under the same warranty deed?

4 Replies

Hi, there,

I am a newbie to BiggerPockets and I am asking some questions about the warranty deed(title).

I bought one foreclosure house in Florida and i was given a "special warranty deed". It appears to me that all foreclosure houses are given this type of title. I found some relevant info via google:

Quoted:

There are two types of deed, a "special warranty deed" in which the grantor (seller) guarantees he encountered no clouds to the title during his period of ownership ONLY. in a "general warranty deed", the grantor guarantees to defend your right of title for claims arising from ANY period. 

Unquoted.

Here are some questions:

1) It appears to me that all foreclosure houses are given this type of title. Is it correct? can the buyer of the house request on the bank to give the warranty deed? is it possible?

2) since i bought the house with special warranty, does it mean that I must sell it in future with special warranty? Is it possible for me to sell it with giving warranty deed to the buyer? If this is the case, does it mean that I , as the seller, will have a bigger liabilities?

Any advice will be greatly appreciated and thanks in advance for your help.

This varies from state to state. Colorado also uses "special warranty deeds". When you buy a REO, that's all you get.

But, if you buy or the seller buy's title insurance, you're still protected against other matters.  When you sell, you can sell with a general warranty deed.  If both the purchase and sale have title insurance, you should be protected against anything that would fall outside the special warranty deed.  Read the title insurance carefully.  When you buy, the title company will do a search and should bring anything to your attention, if there are title defects.  You can also purchase an additional rider on the title insurance that will protect you against any unrecorded matters.

@Pita Lucas they call them special warranty deeds but they are special because they do not warrant title.  I dislike them.  They really should call them Quitclaim deeds.  I always get title insurance with them.  My biggest fear is having the person who had the foreclosure bring an action to set it aside.  I always wait until at least 30 days has past after the foreclosure has finished to close but with banks being so slow that is not a problem.  I also worry about spouses or underage children as some children's rights are tolled until they reach age 18.  it is very rare that the foreclosure would be set aside but @Will Barnard had a foreclosure gone bad case from hell.  I wonder if it has ever ended?

    You would transfer with a Warranty Deed when you sell the property.

Originally posted by @Jerry W. :

@Pita Lucas they call them special warranty deeds but they are special because they do not warrant title.  I dislike them.  They really should call them Quitclaim deeds.  I always get title insurance with them.  My biggest fear is having the person who had the foreclosure bring an action to set it aside.  I always wait until at least 30 days has past after the foreclosure has finished to close but with banks being so slow that is not a problem.  I also worry about spouses or underage children as some children's rights are tolled until they reach age 18.  it is very rare that the foreclosure would be set aside but @Will Barnard had a foreclosure gone bad case from hell.  I wonder if it has ever ended?

    You would transfer with a Warranty Deed when you sell the property.

 Maybe they should be considered "Limited Warranty Deeds"? 

In CA, a primarily non-judicial foreclosure state, we issue "Trustee's Deed Upon Sale". All documents going back to Notice of Trustee Sale and oral disclosure at auction state that buyers are only getting the beneficiary's security interest which existed at time of pledging collateral (my words, not statute). 

If you are buying at foreclosure sales and have not both been educated yourself in title and failed to research each property by chaining title in advance of sale, then any prospective bidder is buying in ignorance of facts. If you don't know the implication of receiving a special warranty deed are, you have more homework ahead. 

@Pita Lucas

Probably depends on state...but in Texas I can buy via SWD and selling via GWD although i can't think of a good reason to do so.

I often buy via general and sell via special. SWD in Texas does warrant title, but only during the seller's period of ownership. There is little value to a buyer receiving a GWD over a SWD when an owner's policy of title is purchased.  

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