Convert Special Warranty to General Warranty

[Account Closed]

Hi this is my first post and I have been reading all the useful information on this site.  I am happy to see that most people at BP are very helpful towards their fellow investors. 

I would like to know by what process can I get a Special Warranty Title converted to a General Warranty title, if I pay off the liens or second mortgages ? I have heard that I can go to the court and do a quite title or something like this.

I plant to participate in buying a home on Homesearch, and I know that they will convey a SWD. I understand their are some risk with county liens and, 2nd mortgages being attached to the property, that Imay inherit if I win the auction

[Christian Carson]

If you want your seller to give you better warranties, you have to get him/her to re-execute the deed, and probably buy title insurance. You can buy title insurance anyway, without conveying the property, so that's an alternative. It's probably not going to affect marketability if the title search does not turn up any defects.

Title and deeds are two different things. Title is the concept of rights associated with owning property, and the deed is a document evidencing transfer of title. Title, when good, allows you to legally keep others off your land. A deed without title is void.

Warranties of title are what differentiates the general warranty deed from the special warranty deed to the quitclaim deed.

In the time before real estate gurus and do-it-yourself deed prep kits, there were rules about when which deed was appropriate to use.

General Warranty Deed
When a property is conveyed to a purchaser for value, the buyer usually demands that the seller promise, or "warrant" that s/he has good title to the property, and that the buyer won't be harassed by any claims on their title. This warranty goes all the way back to the beginning of time, or the "root of title" as we call it. The seller usually pays for the buyer to get title insurance in order to insure against the risk of any adverse claims.

Special Warranty Deed
This deed didn't used to exist, but came into vogue for foreclosure sales and the like. The seller of this property promises or warrants that the seller didn't impair the title of the property while the seller owned it. No mention is made about any impairments or claims against title before the seller owned the property. 

Quitclaim Deed
This deed has traditionally been only used to cure defects in title -- like when a grandson may have inherited at 1/335 share in a property, but no one is really sure whether that's true, and a buyer has come along and needs to get the signatures of all the possible heirs before being secure in his title. These types of interests are typically not insurable, which is why the quitclaim deed is used. 

Here's my nit. The increased use of quitclaim deeds for bona fide real estate transactions is making title work more complex, and in turn, more expensive. A warranty deed is a good indication that title insurance was purchased, so a warranty deed was traditionally reliable for issuing title insurance. If a property has a string of quitclaim deeds, I might have to follow the root of title back many more years.