When you sell or otherwise transfer property, you generally must file some sort of document called a deed saying what property was transferred, who transferred it and who received it. Different types of deeds serve different purposes and make different levels of guarantees about ownership of the property. Some types of deeds include quitclaim deeds, general warranty deeds and statutory warranty deeds.
TL;DR (Too Long; Didn't Read)
A statutory warranty deed is one authorized by state law to use certain legal language to make certain guarantees about a property. Generally, they involve guarantees about the seller having legal right to the property.
Deed Definition and Purpose
A deed is a legal document that records someone transferring a right to property to someone else. Generally, they must be filed with a local recording office, where they're on view to anyone who wants to see them so people can know who owns which properties in the area.
Different types of deeds can serve different purposes. For example, in some states a deed of trust conveys property to a trustee to hold until a loan is paid off. A sheriff's deed can be used if a property is auctioned off for an unpaid mortgage or property tax. Special deeds called master deeds are used to set up condominiums under local laws.
Different types of deeds also make different guarantees about title to the property. For example, a quitclaim deed indicates that someone is transferring all their rights in a property to someone else, but it doesn't make any sort of guarantee about what rights they had or whether anyone else has any interest in the property.
Understanding Warranty Deeds
A warranty deed is one that makes explicit guarantees about who owns a property. It generally guarantees explicitly that the person transferring the property has the right to it, that there are no undisclosed other interests in the property and that the person transferring it will do whatever is necessary to protect the person receiving it against claims to the contrary.
That is the warranty involved in a warranty deed. It relates only to who holds title to the property and is separate from any sort of warranty on the buildings, land or items on the property. In theory, if you buy a piece of land with a warranty deed and someone later claims that they had title to the property, a lien on it or some other rights, you could sue the seller.
In practice, title insurance is usually used for this purpose. A title insurance company will investigate to make sure the property has a clean chain of title, meaning a clear history of the land being transferred from one party to another and all liens removed. It will then issue an insurance policy against any issues that may arise. The company will usually inspect the chain of publicly available deeds to make sure they describe the full property and use proper legal language to transfer the land.
Special and Statutory Warranty Deeds
Some states allow people to issue what are called statutory warranty deeds, meaning that they implicitly contain certain guarantees set out in state law. The statutory warranty definition varies from state to state, so it's important to understand exactly what warranties are contained within a particular deed form if you're buying or selling property.
Some states allow what are called special warranty deeds, which only offer a limited warranty as to title problems that may have arose while the person transferring the property owned it. If previous owners had title issues, those would affect the buyer should they come up in the future, but they wouldn't be covered by the special warranty.
Steven Melendez is an independent journalist with a background in technology and business. He has written for a variety of business publications including Fast Company, the Wall Street Journal, Innovation Leader and Ad Age. He was awarded the Knight Foundation scholarship to Northwestern University's Medill School of Journalism.