One good deed deserves another… in deed it does

Author: Bill McAfee; owner of Empire Title

Article Published in March 2014 Edition of The Colorado Real Estate Journal

Bill McAfee, Owner and President of Empire Title

Bill McAfee, Owner and President of Empire Title

In real estate transactions buyers and sellers see many legal documents.  The documents we are going to talk about today show ownership in varying degrees.  We will discuss 3 types of conveyance deeds.  The three types of deeds are: General Warranty Deed aka Warranty Deed, Special Warranty Deed, and Quitclaim Deed.  These deeds differ only in the amount of protection that the grantor (seller) warrants to the grantee (buyer).  All three of these deeds do transfer title to real estate; they just vary in the degree of liability and protection that the seller gives to the buyer.

The definition of a Warranty Deed according to the Colorado Real Estate Manual is a deed in which the seller warrants or guarantees title against defects that existed before the seller acquired title or that arose during the sellers’ ownership.  It does not warrant against encumbrances or defects arising from the buyers own acts. There are certain covenants for warranty’s that are contained in general warranty deeds.  The usual covenants are A) Covenant of seizin, this means the seller has ownership and has the right to convey it.  In addition, the fact that the property is mortgage or has certain restrictions would not breech this covenant.    B) Covenant against encumbrances, this means seller has no liens or claims against the property except those specifically excluded in the deed.  C) covenant of quiet enjoyment, this means the sellers guarantees the buyer will not be evicted or disturbed while possessing the property.  Claims by third parties do not breech this covenant.    D) Covenant of further assurance, this guarantees that the seller will produce and deliver any other documents that are subsequently necessary to make a good title.  E) Covenant of warrant forever, seller guarantee that the buyer will have title and possession to the property (sometimes a part of quiet enjoyment).  Covenant of seizing and covenant against encumbrances will generally relate to the past and usually do not “run with land”.  This means that the current buyer can sue the seller for any breech.  Covenant of quiet enjoyment, covenant of further assurance, and covenant of warrant forever protect against any future defect and are considered to “run with the land”.  This allows any subsequent buyer to sue for breech against any previous seller.  Colorado Statute states that covenant of seizin, peaceable possession, freedom from encumbrances, and warranty contained in any conveyance of real estate or any interest there in, shall “run with the land”, and will be to the benefit of all subsequent buyers and lienors.  To sum up a warranty deed will give the most amount of protection to a purchaser of real estate, definitely a good deed.  One good deed leads to another.

Another deed to discuss is the Special Warranty Deed.  Special Warranty Deeds warrant only against defects arising after the seller bought the property and not against defects arising before that time.  This means a buyer purchasing real estate with a special warranty deed would only have guarantees and protection against those things that the seller created against the property.  Any title issues created prior to our seller acquiring the property would not be warrantied.  In simple terms, the buyer is only protected against the liens or defects which the last seller created.  Buyer has no protections from any previous owners or encumbrancers.  Sometimes one good deed does not lead to another.

A Quitclaim Deed warrants absolutely nothing.  A quitclaim deed conveys the sellers’ present interest in the land, if any.  A quitclaim deed is frequently used to clear up a technical defect in the chain of title or to release lien claims against the property.  Examples of such deeds are corrections deeds and deeds of release.  Simply put, buyer does not receive any protection or warranties from the seller.  If warranties or protection is important to you as a buyer, quitclaim deeds may not be the deed for you.

The type of deed that a buyer desires should always be based on good fundamental judgment and the advice from a real estate agent or attorney.  If the buyer desires maximum protection against past events then the warranty deed is for you.  If the buyer is ok with a warranty and protection from the current seller only then the special warranty is the deed for you.  If no warranties or protection are desired by the buyer then the quitclaim deed will satisfy your need.  As strange as it may seem the title insurance policy that a buyer receives in a typical real estate transaction is not affected by the type of deed that the seller conveys to the buyer.  Buyers may always desire a warranty deed however sellers, such as banks, asset managers, and certain other government agencies may not be willing to issue one.  In this case title insurance is very important as the buyer may not be able to get the warranties and guarantees that they want from the seller.  Title insurance can step in to the shortfalls that special warranty deed or quitclaim deeds or even general warranty deeds may not provide.  One good deed deserves another.


Colorado Real Estate Journal

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