Deeds 101: General Warranty Deeds vs Limited Warranty Deeds

When purchasing real property, you may find a reference in the purchase agreement to the seller providing buyer with a general warranty deed or a limited warranty deed and wonder what's the difference between the two. When a property owner is transferring real property by any warranty deed, the owner (or grantor) is proving a warranty about the validity of title that is being conveyed to the 'grantee'.

An owner transferring property by way of a general warranty deed is providing a warranty to the buyer (the grantee) for any and all prior problems with title, not just title issues that occurred during the owner's period of ownership.  On the other hand, when transferring property to a grantee/buyer by way of a limited (or special) warranty deed, the owner is limiting the warranty to the period during which the owner owned the property.

A general warranty deed form is addressed at Ohio Revised Code section 5302.05.  A limited warranty deed form is addressed at Ohio Revised Code section 5302.07.

When an owner insists on using a limited warranty deed, it is worth questioning the basis for that demand. It's not unheard of in a commercial real estate transaction setting to have the owner insist on a limited warranty deed as a matter of company policy for property sales. However, a buyer would want to confirm that is the only reason. After all, an owner may know of potential title issues with the property that predate the owner's ownership that the owner doesn't want to be on the hook for.

This is where a thorough title exam and title insurance can save the day.  If the title search is clean and the transaction is otherwise a good deal, then accepting a limited warranty deed for the property transfer may be worth the risk.


Stew said...

A limited property deed usually applies between entities transferring their properties. If it's only the buyer and owner involved, then it is a general warranty deed. I may be wrong but that is as far as conveyancing sydney guidelines is concerned.

Anonymous said...

What if a mortgage or lien is discovered after the general warranty deed is transferred and the grantor is deceased?