Tuesday, January 19, 2010

Special Warranty vs. General Warranty

Occasionally, most often in commercial real estate transactions, sellers wish to convey by "special warranty deed", rather than by "general warranty deed".  Buyers are often confused by this.  A simple explanation is:  Under a general warranty deed, the seller warrants that the title is generally good (e.g. there are no clouds on title created by the seller or any prior owners of the subject property).  Under a special warranty deed, the seller warrants only that the seller (but not any prior owners) has not created a cloud on title.  This distinction should not generally be a concern for the buyer if the buyer is obtaining an owner's policy of title insurance.

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