Warranty Deed v. Special Warranty Deed v. Quitclaim Deed
A warranty deed provides certain assurances and protection for the Grantee (the person/entity receiving the property). Transferring a property with a warranty deed means that the Grantor (the person transferring property to the Grantee) promises that there are no liens, encumbrances, or easements affecting the property. It also assures the Grantee that the Grantor owns title to the property free and clear and can transfer that title to the Grantee. A warranty deed covers the entire history of the property. If issues come up with the title after the transfer, the Grantor has to help the Grantee defend its title in the property. Warranty deeds are most commonly used in traditional buy-sell transactions for property.
Special Warranty Deed
A special warranty deed is similar to a warranty deed, except that with a special warranty deed the Grantor is only guaranteeing the property for the time that the Grantor owned the property. If issues with title arise, and those issues originated before the Grantor took title to the property, the Grantor is not responsible for helping the Grantee defend its title.
Unlike a warranty deed or special warranty deed, a quitclaim deed makes no assurances whatsoever about the property. The Grantor is not promising that title is clean; in fact, the Grantor isn’t even promising that he or she owns the property! Because a quitclaim deed is especially risky for the Grantee, this type of deed is typically only used where the Grantor and the Grantee have some connection or relationship. For example, in a divorce situation where one spouse deeds the house to the other spouse. Quitclaim deeds are commonly used to transfer real property to an LLC or a living trust.
It is best to seek the advice of an experienced attorney if you are considering transferring property to an LLC or another person. Not only is it important that the correct type of deed is used, it is also important that the deed is filled out properly to avoid any potential issues with the title.
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