When you're transferring a large asset, such as a home, it's important to make sure the buyer is protected. One way to do this is through a Warranty of Title, which assures the new owner that nobody else has claims on the property. Without a Warranty of Title, a person could buy a house, only to find that a lien was placed on it due to unpaid debt. In most sales, Warranties of Title are included as part of the closing process, but buyers who purchase homes at auction or estate sales must be extra diligent to ensure one is included.
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What Is a Warranty of Title?
As the name implies, a Warranty of Title is a document that guarantees that the title is clean. In the case of property transfers, this simply says that there are no liens or mortgages that could pose problems for the homeowner later. If an issue does arise, the buyer can sue the seller for breach of Warranty of Title. Also known as a Warranty Deed, the Warranty of Title only protects the buyer from liens that were placed on the property during the seller's time on the property, not previous liens that existed before the seller bought it.
Warranty of Title Sample
There are several formats a Warranty of Title can take, but they all have similar features. The seller will need to assure that he has the title to the house and therefore has the right to sell or give it to someone else. It will also specifically state that the property is free of liens or encumbrances and that the seller is absolving the buyer of responsibility of claims against the mortgage forever. Before this, the seller should ensure no liens or claims exist against the property.
Is a Warranty Deed Acceptable Proof of Ownership?
It's unlikely someone will knock on your door and demand you show proof that you own the property. In fact, that sort of documentation can be accessed through your local government's public records. But in case you're ever asked, there are several documents that can serve as proof of ownership, including a Warranty Deed and a Property Deed. The Warranty Deed will have your name on it, as well as a description of the property you own. The Warranty Deed also shows that the previous owner signed the property over to you, serving as additional proof.
What Is a Special Warranty Deed?
Although a Special Warranty Deed sounds like it might be something above and beyond a general warranty deed, it actually offers less protection. With a Special Warranty Deed, a seller only warranties defects in the title that span the length of time she owned the property. That means if anything existed before she moved in, she absolves herself of all responsibility. If you're presented with a Special Warranty Deed, it's important to be aware of the risk this brings. Generally, you see Special Warranty Deeds in connection with the sale of a commercial property transfer rather than a single-family residence.
Where Do You Get a Warranty Deed?
If you're working with a Realtor to sell or buy a home, you'll find that the Warranty Deed is included with all the paperwork you sign at closing. However, if you're doing a For Sale by Owner or you're purchasing a home at an estate sale, you'll likely be looking for a document you can have signed. You can stop by a real estate agency or search for a template online, but it's important to note that it will need to be notarized to be legal. As an extra precaution, it can't hurt to pay an attorney to review the document to make sure all bases are covered before finalizing the deal.