What is the Difference between a General Warranty Deed and a Special Warranty Deed?

The majority of residential properties in Texas are conveyed by general warranty deed.  The standard TREC/TAR contracts say that “At closing…Seller shall execute and deliver a general warranty deed conveying title to the Property to Buyer…” (Paragraph 9B1).  However, in certain instances, the Seller will only convey the property by special warranty deed.  For example, if the property is owned by a trust, an estate, or a bank, the seller might require use of a special warranty deed. 

A deed is the written document that conveys legal and equitable title to real property.  Deeds do not have to be written in any particular form. Most deeds contain implied warranties – for example, a warranty that the grantor presently owns the property being sold, and a warranty that there are no undisclosed liens on the property.  General and special warranty deeds contain, in addition, express warranties of title. 

In a general warranty deed, the grantor expressly warrants the entire chain of title.  In other words, the grantor must defend against all title defects, even defects that were created before the grantor owned the property.  For example, if the buyer’s title is threatened by the estranged husband of someone who owned the property several “links” back in the chain of title, the seller could be called on to answer the claim based on the general warranty deed. 

In a special warranty deed, title is warranted from the grantor only – not for claims arising from any owner further back in the chain of title. The grantor’s liability for title defects is limited to the grantor’s period of ownership up to and including conveyance to the grantee.  In the example above, the seller would have no obligation to defend the buyer against the claim by the estranged husband because the title defect occurred before the seller’s period of ownership.

Claims threatening a buyer’s title are rare in our market because of the prevalence of title insurance.  The research that a title company performs before issuing an insurance policy usually turns up any defects in the chain of title.  Once purchased, the title insurance coverage is there to provide coverage against claims, subject to the limitations and exclusions of the insurance policy.  Many buyers are agreeable to acquiring property by special warranty deed because of the additional coverage that title insurance provides.