A deed is a document that legally transfers title to real property from one person or entity to another. There are different types of deeds. One type is referred to as a “quitclaim deed.” A quitclaim deed communicates to buyers that the holder of the quitclaim deed relinquishes any claim, i.e., “quits” the claim, to an interest in a piece of real estate.
Quitclaim deeds indicate a transfer of a claim to rights. The person who signs a quitclaim deed may not have an actual interest in the property, but they claim an interest. With the quitclaim deed, they relinquish any claim they may have.
Buyers often seek greater protection than that offered by a quitclaim deed. A warranty deed offers that greater protection. It is a deed used in real estate to certify that the owner of real property has title to it that is free and clear. This means that the owner’s interest is not encumbered by any liens, mortgages, or any other types of claims. In other words, a warranty deed proves that the person who signs it owns the property free and clear.
An encumbrance in real estate law is the right of a third party to have some kind of interest in a property. Or it might be a legal liability on the property. It does not prevent the owner from transferring title to another person or entity, but it might have the effect of lessening its value.
There are several types of common encumbrances. Some are financial in nature, e.g., liens and mortgages. Others are not financial but may affect the uses that an owner may make of their property. Examples of these are easements, private restrictions, and covenants.
Some may affect the title, e.g., liens, legal or equitable charges, and others, again, affect the use that can be made of property or the physical condition of it, e.g., covenants and restrictions, easements, and encroachments. A lease can be considered an encumbrance on title to real estate.
What Exactly Does a General Warranty Deed Cover?
Warranty deeds are a type of deed that may come into play in a real estate transaction. The purpose of a general warranty deed is to prove to the buyer that the seller owns the property free and clear of all encumbrances. So, a buyer can purchase the property without concern that a third party may show up with a claim to the property.
For a homebuyer, a warranty deed is the best type of deed to obtain. It represents that no other person or entity has any legal claim to the property.
There are two kinds of warranty deeds: the general warranty deed and the special warranty deed. A general warranty deed is a guarantee that the seller of real estate owns the property free and clear of encumbrances and that they have the legal right to sell it. This deed also contains six covenants, or promises, to the effect that there is no defect in the title to the property.
A defect in title may include:
- An improperly recorded deed that grants some interest in the property;
- An inaccurate description of the property on a past deed;
- A lien;
- An encumbrance;
- A mortgage;
- A judgment;
- Another claim to the property;
- Anything else that prevents a would-be buyer from owning the property.
A general warranty deed is, in effect, a promise that the buyer will own the property, and it is not subject to the claims of any other person. Some other party may have a claim of some kind to a property. If so, it could create a defect of the type that could mean the property has a “cloud” on it.
A general warranty deed covers the entire ownership history of the property. A defect in title could be found by a buyer, and that defect was created before the buyer owned the property. If that is the case, the seller is required to make the effort necessary to correct the title. A special warranty deed, by contrast, only warrants against title defects that were created when the seller holds title to the land.
What Are Present Covenants?
In most states, a general warranty deed contains a total of six covenants for title. Three of these covenants are present covenants, while the other three are future covenants. A present covenant is one that can be enforced against the seller as soon as ownership of the land is transferred. A present covenant may only be enforced against the current seller and not against previous sellers of the land.
The three present covenants are the covenant of seisin, the covenant of the right to convey, and the covenant of no encumbrances. The covenant of seisin is a legally binding assurance that the seller owns the property they claim to own. Additionally, the seller also has the right to possess and occupy that property.
The covenant of the right to convey is an assurance that the seller has the right to transfer their ownership interest. The covenant against encumbrances is an assurance that the seller owns the land “outright,” not subject to liens, tax liens, easements, mortgages, or any other restrictions that might affect a buyer’s right to use or enjoy the property.
If a covenant is breached, the seller must compensate the buyer. An example of a covenant is the “covenant of the right to convey.” Through this covenant, the seller promises that they have the right to convey the property to another person.
What Are Future Covenants?
Future covenants, by contrast, may be enforced against any previous seller of the land.
The three future covenants are:
- The convent of quiet enjoyment;
- The covenant of general warranty;
- The covenant of further assurances.
The covenant of quiet enjoyment is an assurance by the seller that the buyer, once in possession, will not be disturbed in their right to possess and occupy their piece of real estate. The covenant of general warranty is a promise by the seller to take any future action reasonably necessary to perfect the buyer’s title.
The covenant requires the seller to protect the buyer in the event of a third party’s reasonable claim of title to the land. The sixth and final covenant, the covenant of further assurances, requires the seller to remove a defect associated with the title that may arise. A seller who breaches this covenant by failing to remedy the defect is liable to the buyer for damages.
Do I Need the Help of a Lawyer With My General Warranty Deed Issue?
If you are planning a major real estate purchase, you want to consult an experienced real estate lawyer. LegalMatch.com can connect you to an experienced lawyer who can review any deeds at issue in your transaction and explain what they mean to you.
Or if you have an issue with drafting a warranty deed or understanding what rights or responsibilities a deed confers, you should talk to a real estate lawyer. An experienced real estate lawyer near you can review the facts of your situation and the documentation and deeds involved in it. The lawyer can advise you as to how to draft the deed and about the obligations and rights a warranty deed carries.
