Understanding When To Use A Warranty Deed

The process of buying and/or selling a house is often complex, and if this is your first time buying, you’ll likely hear “legalese” that can make anyone’s head spin. Which is often why attorneys are commonly used to draw up deeds for houses and other property, because they’re often the ones to explain what’s going on if the buying and selling process is hung up somehow.

However, hiring a real estate lawyer is pricey, and many agents and their clients are looking to online warranty deed creation to avoid the high costs of an attorney.

Warranty Deeds: Most Common Deed

Before we go further, we’ll quickly sort out a couple concepts for you. Unlike car ownership, which chiefly consists of a legal title that is transferred to the driver upon the last completed lien payment, house ownership requires not just a title, but a deed. A real estate title states actual ownership of the house and the land the house is on, but the deed is the legal document that transfers the title between seller and buyer, or from family member to other family member, and other situations.

If you find yourself in the position of being able to buy a home, or you need to sell your current dwelling, the warranty deed is the most common type of deed used in real estate purchase. It provides the most protections for both the buyer and seller, including the right of the seller to actually sell the property, as well as the right of the buyer to be defended against claims on the title from external parties such as people who might have interest in the property (unknown heirs, any undisclosed liens, judgments, etc).

For instance, let’s say John Doe has obtained financing for a house he’s purchasing from Jane Smith across town. The real estate agent goes online to create a warranty deed so that both John and Jane have the proper protections in place, in case anything goes awry while Jane transfers the title to John. The warranty deed certifies and promises that:

  • Jane has the right to sell her property.
  • Jane has no unknown heirs, or that there are no previous owners who might have an interest or claim on her property. In essence, a clear title was conveyed to her, and now she can convey her property to John.
  • There are no undisclosed loans, judgments, etc, and in the event that, somehow, there are title defects such as these, John will not be held liable for such issues.

The usual buyer/seller relationship is not the only instance in which a warranty deed is created. Such a deed can be created when switching ownership of a house from the seller to a trust, as well as a business owner buying and selling property.

Required Warranty Deed Information

Whether you’re creating the deed or a real estate agent is doing so, either one of you needs to have quite a bit of information:

  • The names and physical mailing addresses of both the buyer and seller. P.O. boxes are not allowed, and the names of both the buyer and seller have to appear on the deed according to their property tax records. The seller’s name is given first, and then the buyer.
  • The property address and parcel number. If you’re the seller that’s completing the online deed, the information can be found on the deed you were given when you first bought the property.
  • County and state information regarding where the seller intends to “sign in,” as well as to which party the original deed will go, such as the buyer, seller, or even an attorney representing either the buyer, seller or a trustee.
  • Whether there will be an exchange of money involved in the transfer of property.

Other terms may be negotiated, but the above information is mandatory. When making a warranty deed legally binding, it has to be signed in the presence of a notary public, and then file the document with the county or town office that handles property documents. The seller must also be sure that all their property taxes are paid in full before signing the deed.

Once all these steps are included, then the deed will be considered fully legally binding, and the transfer of ownership can go forward. While this process is complex, it can go much smoother when not only all parties concerned know their rights and responsibilities with a warranty deed, but that the warranty deed is created online, often saving hundreds of dollars.