A special warranty deed is a deed to real estate in which the grantor—the seller of the property—warrants only against things that happened while they actually owned the property. In other words, the grantor makes no promises regarding clear title issues that existed prior to their possession of the property. In a special warranty deed, the seller of a piece of property only guarantees against issues or encumbrances that arose in the property title while he was the owner.
Two things are guaranteed by a special warranty deed: the grantor owns the property and has the right to sell it, and there were no encumbrances placed on it while he was the owner. Unlike the more popular general warranty deed, which covers the whole history of the property, a special warranty deed has more restrictions. The same fundamental safeguards for the buyer are offered by both regular and customized warranty deeds.
A special warranty deed and a regular warranty deed differ primarily in how they handle the length of time that title ownership is protected. The most frequent usage of special warranty deeds is in commercial real estate transactions. A general warranty deed is typically used in transactions involving single-family homes and other residential real estate. The general warranty deed must be used, according to several mortgage lenders.
Different states have different names for special warranty deeds, including covenant deed, grant deed, and limited warranty deed. Only the time the seller had possession of the property under a specific warranty deed is covered by the guarantee. Defects in a free-and-clear title that might have existed prior to the seller’s ownership are not covered by special warranty deeds.