TYPES OF DEEDS

A general warranty deed is the gold standard of property transfers. This type of deed is overwhelmingly used in residential purchases. Most lenders require a warranty deed for properties they finance. It offers buyers the greatest possible protection from future claims against the title.

For example, if two owners ago there were fines issued because of code violations, or the owner failed to pay HOA fees, as the new owner, you won’t be responsible for paying them after taking ownership of the property.

“Special” sounds good, but a special warranty deed is a less beneficial transfer of ownership to a prospective buyer. It guarantees there has been no encumbrance of the property during the grantor’s ownership of the property. It doesn’t make any representations for anything that transpired before their ownership.

These deeds are commonly used by temporary owners like banks who have acquired properties through foreclosure.

When borrowers default on their mortgages, they sometimes transfer the property to the lender through a deed in lieu of foreclosure to avoid having a foreclosure on their credit history. This type of deed is significant to lenders because foreclosures take a long time and legal fees make them very expensive. Worse, during the foreclosure process, the house can sit vacant, attracting looters and squatters or it may suffer damage from property owners who know they are facing eviction.

Special purpose deeds are used in court proceedings or allow those acting in an official capacity to make property transfers without incurring personal liability. A deed in lieu is a type of special purpose deed and the only type common in residential real estate transactions.