One of my clients recently asked me about the difference between a Special Warranty Deed and a General Warranty Deed.
I contacted Jayne Boyle, a business development officer at Stewart Title and Escrow in downtown Everett. Jayne has worked in the industry for 20 years and is one of my top “title reps.”
Jayne explained the difference, in layman’s terms:
General Warranty Deed
A General Warranty Deed is typically given on a normal resale transaction. It warrants the property from day one – all the way back in time, as long as there are legal records for that property. This means that the seller guarantees that their title is “clear” and free of defects (called “clouds” on the title). Defects or clouds could include liens or issues with access or encroachment (for example, fence lines are not where they should be).
Special Warranty Deed
Also known as a Bargain and Sale Deed, a Special Warranty Deed limits the seller’s liability to the time period during which they owned the property.
When home buyers see a Special Warranty Deed, they sometimes assume that they’re not covered prior to the current seller. But that’s not true, because the parent seller provides, at their cost, a title insurance policy that goes back to the property’s origins.
Which one is better?
Jayne told me that home sellers have only recently started to become aware that there are two types of deeds. And they do have a choice as to the type of deed. Jayne predicts that because people are looking to limit their liability, the Special Warranty Deed will become much more common.
For the buyer, either type of deed will do the job equally well, because the buyer gets a full title insurance policy.
Choosing a title company
Real estate brokers and lenders have strong relationships with title companies, and we recommend companies we trust to our clients. Jayne explained that title policies from company to company are very similar – they use the same verbiage and offer the same coverage.
But if you want to evaluate title companies on your own, Jayne recommends considering two key factors: the financial health of the title company and their customer service.
Jayne says, “The title is usually ordered at the time of listing a property, because we want to make sure that if there are any things to be fixed, it won’t delay a closing.”
If you’re stumped by real estate terms, I’d love to help answer your questions. My name is Joni Kerley and I specialize in Snohomish County, WA real estate. Give me a call at 425-343-4545.