[WSBARP] Custom Limited Warranty Deed

[Dwight Bickel]

As a purchaser, or lawyer for a purchaser, I would not accept the odd form of quitclaim deed Mike posted, despite its possible warranty limited to the grantor's title insurance policy coverage.

That is the reciprocal of the common Special Warranty Deed, which gives warranty as to matters created by the Grantor (such as liens and judgments), but which gives no warranty as to title defects not created by the Grantor. The Special Warranty Deed language gives warranty for matters that would be excluded from the coverage of the Grantor's title insurance. That is the warranty most valuable to me as a purchaser. A purchaser is already receiving a new title insurance policy to protect against present title defects, and matters created by the Grantor that would not be excluded for the Purchaser.

I have seen a similar limited warranty used by lawyers to convey into an estate planning trust. It purports to give warranties, so that would have the benefit that the title insurance coverage continues to protect the grantor, and indirectly their trust and trust beneficiaries if there was a title defect that existed at that date of policy. For such a conveyance, it made sense. But not for a purchaser.

There was a need for such a warranty limited to title policy coverage due to the termination of older forms of owner's title insurance policies when the grantor no longer owns an interest in the land and has no warranty liability. The present default ALTA Homeowner's Policy of Title Insurance [aka First American Eagle Policy] avoids that problem by clearly continuing in favor of trustees and beneficiaries even if a quitclaim deed was used.

If a person uses a quitclaim deed form, then adds a warranty, in my opinion a court would enforce that warranty against the seller, just as a Special Warranty Deed is enforced even though it is not a statutory form. On the other hand, as a lawyer for a purchaser I would advise that there is risk it would not be enforced and seek a Bargain and Sale Deed or Special Warranty Deed instead.

There remain instances where a title insurance company may decline to assume some risks without a warranty from the seller either in the deed, or a direct indemnity. The odd deed form sent by Mike would have almost no value to a title insurance company that would want subrogation rights to pursue a seller.

Dwight A. Bickel
Real Property Title Advisor
Washington Title Professional
Dwight at DwightBickel.com<mailto:Dwight at DwightBickel.com>
https:/dwightbickel.com
206-484-1976

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbarp/attachments/20210423/3d6cfb83/attachment.html>