Special Warranty Deed vs. General Warranty Deed: Key Differences

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A general warranty deed guarantees the buyer a clean title across the property’s entire history: the seller answers for defects created by anyone at any time. A special warranty deed guarantees only against title problems that arose while the seller owned the property, so defects created by earlier owners become the buyer’s problem. Both transfer ownership, and both carry promises from the seller (the grantor) to the buyer (the grantee). The difference is how far back those promises reach.

The name is misleading. “Special” sounds like extra protection, but a special warranty deed gives the buyer less coverage than a general warranty deed.

What a general warranty deed promises

A general warranty deed is the strongest form of deed commonly used in U.S. real estate. The seller guarantees that the title is free of ownership claims, liens, mortgages and other encumbrances, apart from any listed in the deed. The guarantee holds no matter when the problem arose or who caused it. If a contractor’s lien was recorded against the property 30 years and four owners ago and was never released, the seller under a general warranty deed is still responsible for it.

That guarantee is usually expressed through a set of traditional covenants of title:

1. Covenant of seisin: the grantor owns the property and the interest being conveyed.
2. Covenant of right to convey: the grantor has the legal authority to transfer it.
3. Covenant against encumbrances: no liens, easements or other burdens exist beyond those disclosed.
4. Covenant of quiet enjoyment: no one with a superior claim will disturb the grantee’s possession.
5. Covenant of warranty: the grantor will defend the title against lawful third-party claims and compensate the grantee for losses.
6. Covenant of further assurances: the grantor will take reasonable steps, such as signing corrective documents, to perfect the title.

The first three are often called present covenants, because they are either true or broken at the moment the deed is delivered. The last three are future covenants, because they protect the grantee against claims that surface later. Exact wording and enforceability depend on state law.

For residential buyers, the practical value is that the seller is personally on the hook if an old defect appears. That is why general warranty deeds are the usual choice in residential sales and many mortgage lenders expect one when they finance a home purchase.

What a special warranty deed promises

A special warranty deed contains many of the same promises but limits them to the period the grantor held title. The grantor is liable only for debts, liens or other encumbrances they created or allowed during their ownership, such as a second mortgage they took out, a judgment lien entered against them, or an easement they granted to a neighbor. The grantee assumes the risk of anything that dates from earlier owners.

Depending on the state, deeds with this limited scope may be called limited warranty deeds, covenant deeds or grant deeds. The labels are not perfectly interchangeable. A grant deed in some states carries specific statutory promises that differ from a typical special warranty deed. The deed’s actual language and the state’s statutes determine what is covered, not the title at the top of the document.

Key differences at a glance

What both deeds have in common

Both deeds legally transfer ownership from grantor to grantee and are typically recorded with the county. Each names the grantor and grantee and describes the property, usually by legal description as well as street address. Each also lists any encumbrances the buyer is accepting, such as recorded easements or existing mortgages. Finally, each includes the grantor’s warranty of ownership and right to transfer, plus a promise to defend the title against covered claims. That separates both from deeds that carry no warranty at all.

When each deed is used

Commercial property

Special warranty deeds are standard in many commercial real estate transactions. Commercial sellers, often companies or investment entities, usually do not want open-ended liability for decades of prior ownership. Commercial buyers are typically represented by attorneys and rely on title insurance and their own due diligence rather than on the seller’s personal guarantee.

Residential sales between individuals

In a typical home sale between private parties, a general warranty deed is the common choice. It gives buyers the strongest seller guarantee available and gives lenders a clean chain of warranties. Your agent or closing attorney can tell you what is customary in your state.

Foreclosures, REO and institutional sellers

Residential property is the main exception to the general warranty norm. Foreclosed homes, real-estate-owned (REO) properties and many short sales are usually conveyed with special warranty deeds. Bank-owned homes and properties sold by Fannie Mae (the Federal National Mortgage Association) or the Department of Housing and Urban Development (HUD) commonly transfer this way.

A lender that took a property through foreclosure never lived there and knows little about its history, so it will stand behind only its own period of ownership.

In one Mississippi case, a Grenada County couple defaulted on their home loan in 2012, and their lender, Wells Fargo Bank, foreclosed in February 2013. Wells Fargo then conveyed the property to Fannie Mae by special warranty deed, so its guarantee covered only the bank’s own brief time on title.

How a special warranty deed can leave a buyer exposed: a hypothetical

Consider a hypothetical house with two owners before you. The first owner let it fall into serious disrepair, and the city’s code enforcement fines were recorded as liens against the property. That owner then stopped paying the mortgage, the bank foreclosed, and the bank sold the house to a second owner.

The second owner renovated the home, lived there for 10 years, and then sold it to you using a special warranty deed. The second owner did nothing to create the code enforcement liens, so they fall outside that deed’s warranty.

Years later, when you try to sell, the old liens surface and cloud the title, which can delay or block the sale. At minimum, you would need to pay off the city’s liens to clear the title, and you cannot recover that cost from the second owner.

Under a general warranty deed, you could look to the second owner for compensation. A thorough title search before your purchase might also have found the recorded liens, and a title insurance policy could have covered the loss if the search missed them.

Statutory warranty deeds, quitclaim deeds and other forms

• Statutory warranty deed: a short-form deed whose warranties come from state law rather than being written out. A phrase such as “conveys and warrants” brings in the covenants the statute defines. In several states these match a general warranty deed, but each state’s statute sets the scope, so the label alone does not tell you whether coverage is general or limited.
• Bargain and sale deed: in some states, a deed that implies the grantor holds title but makes few or no express promises about encumbrances.
• Quitclaim deed: transfers whatever interest the grantor has, if any, with no warranties. It is typically used between family members, in divorces to remove a spouse from title, or to clear up a technical defect, rather than in arm’s-length sales.
• Special purpose deeds: executor’s, trustee’s, sheriff’s and similar deeds, which often carry limited or no warranties because the signer is acting in an official or fiduciary role.

From most to least protection for the buyer, the usual order is general warranty, special (limited) warranty, then quitclaim.

Title searches and title insurance

A deed’s warranty is a promise, and enforcing it means pursuing the seller, who may have moved, dissolved or lack the money to pay. Buyers therefore rarely rely on the deed alone.

A title search reviews public records such as recorded deeds, mortgages, liens, judgments and easements to confirm who owns the property and what claims exist against it. Attorneys, title companies and individuals can perform one. Searches can still miss things, including forged documents in the chain of title, recording errors, undisclosed heirs or liens indexed under a misspelled name.

Title insurance is an indemnity policy that pays covered losses from title defects that existed at the time of purchase, subject to the policy’s exceptions. A lender’s policy protects the mortgage lender. An owner’s policy protects the buyer and is usually a separate, optional purchase paid once at closing. It is available regardless of deed type. With a special warranty deed it is the main protection against problems from before the seller’s ownership, so review the title commitment and its listed exceptions before closing.

Choosing between the two

Your role and leverage usually decide which deed you get.

• As a buyer, a general warranty deed gives you a direct claim against the seller for any title defect. If the seller offers only a special warranty deed, you can ask for a general one, negotiate the price, or rely more heavily on title insurance and a careful title review.
• As a seller, a special warranty deed limits your long-term exposure. Expect resistance in a standard residential sale, where buyers and lenders anticipate a general warranty.
• In a foreclosure or REO purchase, institutional sellers rarely move from their standard special warranty deed, so your protection comes from the title search and an owner’s title insurance policy.

FAQs

The Bottom Line

Homebuyers, sellers and anyone purchasing a foreclosure or bank-owned property should know how far back a deed's promises reach. A general warranty deed gives buyers the broadest claim against the seller, while a special warranty deed shifts older defects onto the buyer. With either deed, a thorough title search and an owner's title insurance policy offer protection that does not depend on finding and collecting from the seller.