We often are asked about the different types of deeds commonly used in real estate transactions. In this post we will review three key types of deeds: the Bargain and Sale Deed, the Special Warranty Deed, and the Statutory Warranty Deed (also known as a General Warranty Deed in some states). Each of these deeds has specific uses, advantages, and potential risks.
The following visual may help as we compare the different deeds:
| Deed Type | Warranties Provided | When to Use | Buyer Protection Level |
|---|---|---|---|
| Bargain and Sale Deed | No warranties, conveys grantor’s interest only | Foreclosures, tax sales, family transactions | Lowest |
| Special Warranty Deed | Warranties only during grantor’s ownership | Commercial transactions, trustee sales | Medium |
| Statutory Warranty Deed | Warranties for the entire history of the property | Residential real estate transactions | Highest |
1. Bargain and Sale Deed
What Is It? A Bargain and Sale Deed is a property transfer document where the grantor conveys ownership to the grantee without providing any guarantees or warranties about the property’s title. The grantor transfers their interest in the property, but makes no promises that the title is free from liens or other encumbrances.
When Is It Used?
- Foreclosure or Tax Sales: The entity (bank or government) may not have complete knowledge of the property’s history, and therefore, provides no guarantees.
- Estate Settlements or Transfers Between Family Members: Used when the parties involved are familiar with the property and are willing to accept some risk.
Key Characteristics:
- No Warranties: The buyer accepts the property “as is.”
- Grantor’s Interest Only: The deed only transfers whatever interest the grantor has in the property.
- Risk to Buyer: The buyer assumes more risk compared to other deeds since there is no protection from potential title defects or claims.
Advantages:
- Lower Cost: The absence of warranties may reduce transaction costs.
- Practical in Certain Situations: It’s useful when the grantor cannot provide a full history of the title, such as in foreclosure cases.
2. Special Warranty Deed
What Is It? A Special Warranty Deed offers limited protection to the buyer. The grantor guarantees that the property was free of defects and encumbrances only during their ownership period. They do not make any warranties about the title’s condition before they acquired the property.
When Is It Used?
- Commercial Real Estate Transactions: Often used by entities that do not wish to take responsibility for title issues that predate their ownership.
- Property Sales by Trustees: Common when the seller is acting in a fiduciary capacity, such as an estate sale or sale by a bank.
Key Characteristics:
- Limited Warranty: The grantor is liable for title defects only during their ownership.
- Risk to Buyer: There is some risk to the buyer, as issues predating the grantor’s ownership are not covered.
Advantages:
- Balanced Risk: Provides more protection than a Bargain and Sale Deed but less than a Statutory Warranty Deed.
- Common in Commercial Settings: Often considered an acceptable compromise for commercial transactions.
3. Statutory Warranty Deed (General Warranty Deed)
What Is It? A Statutory Warranty Deed, sometimes referred to as a General Warranty Deed, offers the broadest protection to the buyer. The grantor guarantees that the title is free of defects for the entire history of the property, not just during their ownership.
When Is It Used?
- Residential Real Estate Transactions: This deed is most commonly used in residential transactions where the buyer seeks maximum protection.
Key Characteristics:
- Full Warranty: The grantor guarantees the title against any defects or claims, no matter when they occurred.
- Minimal Risk to Buyer: The buyer has the greatest protection against any title defects, past or present.
Advantages:
- Best Protection: The buyer receives the highest level of assurance that they are receiving clear title.
- Common in Residential Transactions: Provides peace of mind for homebuyers and is a standard in residential sales.
Each deed serves a specific purpose. If you have questions on which will be used on your next transaction call any one of our escrow offices:
Sources and references:
- American Bar Association (ABA) – ABA Property Law Resources
- The National Association of Realtors (NAR) – NAR Real Estate Resources
- Investopedia – Investopedia – Types of Deeds
- Washington State Bar Association (WSBA) – WSBA – Real Property Section
