Using a Warranty Deed to Buy Property

A deed is the legal document that transfers legal title from one person to another. A warranty deed—also known as a general warranty deed—is a specific type of deed that guarantees that the owner of the property owns it free and clear, and is able to transfer the property to the seller.

What must be included in a warranty deed

Any type of deed must contain the following information to be legally valid:

• The name and address of the person conveying the property (the grantor)
• The name and address of the person receiving the property (the grantee)
• The legal description of the property (this could be a lot number or a description of property lines), which you can find on the previous deed
• A statement that the grantor intends to convey the property to the grantee

For the deed to be a warranty deed, it also must state that:

• The grantor is the legal owner of the property and has the legal right to transfer the property.
• There are no outstanding claims against the property by any creditor.
• The grantor guarantees that he or she has clear title and, if there is a problem, the grantee is entitled to compensation from the grantor.

It's important to note that a warranty deed does not actually prove the grantor has ownership (a title search is the best way to prove that), but it is a promise by the grantor that they are transferring ownership and if it turns out they don't actually own the property, the grantor will be responsible for compensating the grantee.

How a warranty deed is different from other deeds

The key component of a warranty deed is that it states that the grantor owns clear title and provides a guarantee about that. Compared to other types of deeds:

• A quitclaim deed conveys only what the grantor owns and makes no promises that there are no other claims against the property.
• A deed of trust is used to secure a mortgage, and gives the mortgage company the right to sell the property if the borrower does not pay the mortgage back.
• A survivorship deed is one by which two (or more) people take title to a property as joint tenants with right of survivorship. If one person dies, the other person automatically becomes the owner of the property without any transfer being necessary.

How to use a warranty deed to transfer property

A warranty deed is used when there is a sale or transfer of real property. Normally, there is a contract of sale that both parties sign. If financing has to be approved, then that can take a few weeks to process. A title search is done to make sure the seller owns the property free and clear of any claims. The deed is the final piece of the puzzle, and is the document that legally transfers the property from one person to another.

Each state has its own warranty deed form that you can locate by searching online for "warranty deed" and your state's name. Or you may want to engage an online services provider for help in preparing it. Once the warranty deed is executed, it must be filed in the county register of deeds office to be legally valid. Once that happens, the property transfer is complete.