What Is a Special Warranty Deed?

A special warranty deed is a legal document that conveys an ownership interest in real property from one person or entity to another. Under a special warranty deed, the seller (grantor) only promises to defend against claims that arise during the period in which they owned the property, not any claims that existed prior to assuming ownership of the property. This type of deed is typically used in commercial real estate transactions.

Example of a Special Warranty Deed

For instance, if a commercial property is sold by one party to another and there is a dispute about tenant rights that arose from the former owner’s negligence, a special warranty deed will protect the new owner from liability for the tenant’s claim. That is because the new owner, by way of the special warranty deed, guarantees they will defend any claims, or provide compensation to the tenant, arising only from their own stewardship of the property.

The Benefits of a Special Warranty Deed

The buyers of property under a special warranty deed should receive some peace of mind that they are not inheriting any disputes that existed before purchasing the property. The seller of the special warranty deed is also shielded from claims that may have existed prior to them owning the property, but not subsequent disputes arising from during their time of ownership.

However, buyers of special warranty deed property should be sure to conduct thorough due diligence prior to purchasing the property. Even though the seller guarantees to defend any claims that arise during their ownership of the property, buyers should still investigate any potential claims or liens prior to buying the property to ensure they are not inheriting any potential legal obligations.