General Warranty Deeds versus Limited Warranty Deeds

Morris|Hardwick|Schneider




General Warranty Deeds versus Limited Warranty Deed

REO sales are a major part of the current real estate market. Most REO sellers require that the buyer sign a REO contract addendum which overrides provisions of the GAR contract. One common change is that the seller provides a Limited Warranty Deed to the buyer at closing.

So, what is the difference between a General Warranty Deed and a Limited (or Special) Warranty Deed?

Under a General Warranty Deed, the seller warrants the title to the property from the beginning of time. If there is a defect, regardless of the cause, the buyer has the option of proceeding against the seller for any resulting damage. Under a Limited or Special Warranty Deed, the seller is only warranting the title during their ownership. They do not warrant anything that may have happened prior to the foreclosure.

As a practical matter, most buyers who find themselves in the midst of a title problem are more likely to file a claim under their owner's title insurance policy than they are to sue their seller. And if the buyer did want to sue the seller, it is almost inevitable that the seller has moved out of state, out of the county or out of radar. The cost of getting the seller into a court with proper jurisdiction may well exceed the cost of the claim.

Hopefully this will answer any questions your buyer may have on this topic. If it does not, please feel free to have them contact me directly. I look forward to serving you and your clients.


Jennifer Karel
Morris|Hardwick|Schneider
Senior Managing Attorney
JKarel@closingsource.net

East Cobb East Cobb Remax
3730 Roswell Road, Ste 25 2050 Roswell Road
Marietta, GA 30062 Marietta, GA 30062
770-565 3800 678-784-4230