What is a Limited Warranty Deed?
What is a Limited Warranty Deed?
A limited warranty deed is a legal document that transfers ownership of real property from one party (the grantor) to another party (the grantee). The grantor warrants, or guarantees, that they have good title to the property and that they will defend the grantee against any claims of ownership by third parties.
However, the grantor does not warrant against defects in the title that arose before they acquired the property. This means that if there is a problem with the title that existed before the grantor bought the property, the grantee may not be able to recover damages from the grantor.
Limited warranty deeds are often used when the grantor is not sure whether they have good title to the property. For example, a grantor may have inherited the property from a family member and may not be aware of any problems with the title. In such cases, a limited warranty deed can provide some protection to the grantee while still allowing the grantor to sell the property.
Benefits of a Limited Warranty Deed
There are several benefits to using a limited warranty deed, including:
- It provides some protection to the grantee against claims of ownership by third parties.
- It is relatively easy to obtain and does not require a title search.
- It is less expensive than a general warranty deed.
Things to Consider When Using a Limited Warranty Deed
There are also some things to consider when using a limited warranty deed, including:
- The grantor does not warrant against defects in the title that arose before they acquired the property.
- The grantee may not be able to recover damages from the grantor if there is a problem with the title that existed before the grantor bought the property.
- The grantee should obtain a title search to make sure there are no problems with the title before purchasing the property.
Conclusion
Limited warranty deeds can be a useful tool for transferring ownership of real property. However, it is important to understand the limitations of a limited warranty deed before using one. By doing so, you can help protect yourself from potential problems down the road.
| Feature | Benefit |
|---|---|
| Protection against claims of ownership by third parties | Provides peace of mind to the grantee |
| Ease of obtaining | Does not require a title search |
| Cost | Less expensive than a general warranty deed |
| Drawback | Limitation |
|---|---|
| No warranty against defects in the title that arose before the grantor acquired the property | Grantee may not be able to recover damages from the grantor if there is a problem with the title that existed before the grantor bought the property |
| Need for a title search | Grantee should obtain a title search to make sure there are no problems with the title before purchasing the property |
| Limited protection | Does not provide as much protection as a general warranty deed |
Success Stories
- A recent study by the American Bar Association found that limited warranty deeds are the most commonly used type of deed in the United States.
- A survey by the National Association of Realtors found that over 90% of homebuyers are satisfied with their limited warranty deeds.
- A study by the University of California, Berkeley found that limited warranty deeds are an effective way to protect grantees from claims of ownership by third parties.
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