Special Warranty Deed vs. General Warranty Deed
Question: We are buying an office building in Casa Grande that the seller purchased two years ago. The proposed purchase contract drafted by our attorney provides for a general warranty deed from the seller. The counter offer drafted by the seller’s attorney provides for a special warranty deed from the seller. In a recent column you discussed the difference between a quit claim deed and a special warranty deed. What is the difference between a general warranty deed and a special warranty deed?
Answer: A general warranty deed is a warranty of good title by a seller from the beginning of time. A special warranty deed is a warranty of good title by a seller only during the time of ownership. Although buyers and their attorneys may request a general warranty deed from a seller, more than 90% of real estate transactions in Arizona are closed with special warranty deeds.
A hypothetical example of the importance of this distinction between a special warranty deed and a general warranty deed is a forged signature ten years ago of the actual owner of an office building. Even if the office building has been sold two or three times in the last ten years since the forged deed of the actual owner, the actual owner obviously still owns the office building. If the seller of the office building had provided a general warranty deed to you, you would have a claim against the seller for the title defect that occurred ten years earlier. If the seller of the office building had provided a special warranty deed to you, you would not have a claim against the seller because the seller only warranted good title, i.e. no title defects, for the two years that the seller owned the office building.
Under a buyer’s title insurance policy, however, a buyer should have a claim against the title insurance company for defective title whether the seller signed a general warranty deed or a special warranty deed.
Note: A general warranty deed is oftentimes drafted with the word “general” removed from the written deed.