The deed of guarantee is a document often used in real estate and which offers the greatest protection to the buyer of real estate. It pledges or warrants that the owner owns the property free of any liens, mortgages or other pending encumbrances against it.

The two parties involved in a Statutory warranty deed are the seller or owner, also called the grantor, and the buyer or beneficiary. Either party may be an individual or a business, and are often strangers to each other.

There are different types of deeds such as deed of guarantee, deed of special guarantee and deed of waiver. The difference between these acts is generally defined by the guarantees and commitments transmitted by the seller to the buyer.

How warranty deeds work

A deed is an important legal document that transfers property from one entity to another, often in the case of a real estate transaction. A general warranty deed provides the buyer with the highest form of protection. Deeds of security are often put in place when a buyer tries to obtain financing for a mortgage or title insurance.

All deeds contain the date of the transaction, the names of the parties involved, a description of the transferred property and the signatures of the buyer. Deeds may need to be signed in the presence of a witness and/or a notary.

In a deed, the grantor guarantees that he is the rightful owner of the property and that he has the legal right to transfer title.

With a general warranty deed, the licensor is liable for a breach of any warranty, even if the breach occurred without their knowledge or during a period when the licensor did not own the property. The general warranty deed puts the grantor at great risk, as he is liable for any breach that may have occurred far beyond his knowledge or ownership of the property.

This is why title insurance is used in most transactions to protect against potential claims and liens. A title management company would perform a full title search and explore any other possible violations before the property is transferred.

Among the agreements and protections granted by a deed of guarantee, we can cite

  • The Licensor warrants that it is the rightful owner of the Property and has the legal right to transfer title.
  • The grantor warrants that the property is free and clear of all liens and that there are no unpaid claims on the property from any creditor who uses it as security.
  • It is guaranteed that the title to the property will withstand any claim by a third party to the property.
  • The licensor will do whatever is necessary to clear the title to the grantee.

Key points to remember

  • The deed of guarantee is a document often used in real estate which offers the greatest protection to the buyer of the property.
  • The deed pledges or warrants that the owner owns the property free of any outstanding liens, mortgages or other encumbrances.
  • Licensor is liable for breach of any warranty, thereby placing Licensor at great risk.

Special Consideration: Special Warranties and Waivers

A special guarantee deed is nowhere near as comprehensive as its general counterpart, as it has only two guarantees:

  • The licensor warrants that he has received the title.
  • The licensor guarantees that the property was not encumbered during the period in which he owned it.

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A special warranty deed does not protect against claims prior to receipt of title by the licensor. Special guarantee deeds are generally used more in the world of commercial real estate.

As with most deeds, the deed of security must contain an accurate legal description of the property being transferred, be signed and witnessed in accordance with the law of the state where the property is located, and delivered to the beneficiary upon closing of the transaction. .

Like the warranty deed, the quitclaim deed transfers ownership from one individual to another. Title insurance is not necessary for this type of deed. And unlike the warranty deed, the quitclaim deed is established when property is transferred without sale. It can therefore be used, for example, when property is transferred between members of the same family.

Disclaimer deeds offer less protection than a warranty deed. They release the owner or grantor of his rights to the property and do not specify whether he was the legitimate owner from the outset. Rather, it is assumed that if the grantor has ever been the owner, he or she relinquishes any claim to the property upon signing the deed. This type of deed also prevents the owner from having future interests in the property.

That being said, the buyer accepts all terms and assumes the risk that there are other claimants to the property.