Special Warranty Deed
A deed where the grantor warrants title only against defects arising during their ownership period. Unlike a general warranty deed, it does not protect against claims from before the grantor acquired the property.
Understanding Special Warranty Deed
A special warranty deed occupies the middle ground between a general warranty deed and a quitclaim deed. The grantor provides warranties, but only for the period of their ownership. They guarantee they haven't created any encumbrances and will defend against claims arising from their actions, but take no responsibility for issues predating their ownership.
Special warranty deeds are standard in certain transaction types. Banks selling REO properties use them because they acquired the property through foreclosure and can't warrant the history before foreclosure. Commercial property sales often use special warranty deeds. Builders may use them for new construction.
For the buyer, a special warranty deed shifts more risk than a general warranty deed. Any pre-existing title defects are the buyer's problem. This makes title insurance even more important when accepting a special warranty deed—the policy covers what the deed doesn't warrant.
The language distinguishing special from general warranty deeds can be subtle. 'Grant, bargain, and sell' typically indicates special warranty, while 'warrant and forever defend' indicates general warranty. Always read the actual covenants to understand what's being warranted.
Real-World Example
A bank forecloses on a property and sells it as REO. The bank provides a special warranty deed warranting title only against claims arising from the bank's ownership (typically a few months). Any issues from the previous owner's 20 years of ownership are not covered by the bank's warranties.
Texas-Specific Information
Texas special warranty deeds use language warranting 'by, through, or under' the grantor. Texas Property Code Section 5.023 provides the statutory form. Special warranty deeds are standard in Texas commercial transactions and bank REO sales.
Related Terms
Warranty Deed
A deed in which the grantor guarantees clear title and promises to defend against all claims. A general warranty deed provides the strongest title protection, warranting the entire chain of title back to the property's origins.
Quitclaim Deed
A deed that transfers whatever interest the grantor may have in property without any warranties about the quality of title. The grantor makes no promises about ownership—they simply 'quit' any claim they might have.
Title Insurance
An insurance policy protecting property owners and lenders against financial loss from defects in title. Unlike other insurance that covers future events, title insurance protects against past events that affect current ownership.
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