Is a Special Warranty Deed Bad? Warranty, Special Warranty and Quitclaim Deeds in Florida

Is a special warranty deed bad? For most Palm Beach County buyers, the short answer is no, as long as you also buy an owner's title insurance policy. The deed is the document that hands the property from seller to buyer. Its wording decides how much the seller promises about the title. A general warranty deed promises the most, a special warranty deed promises less, and a quitclaim deed promises nothing at all. This guide explains each type, when sellers in South Florida use them, and how to protect yourself when you get less than a full warranty.

Key takeaways

• Florida law sets out a statutory form of warranty deed. A deed made in that form carries full common-law covenants, so the seller stands behind the title against everyone.
• A special warranty deed only covers problems that arose while the seller owned the home. Problems from earlier owners are not the seller's to fix.
• A quitclaim deed passes whatever interest the seller has, with no promises. It is mainly used to clean up title, not to sell to strangers.
• Builders, banks and other institutional sellers often use special warranty deeds. Estates and trusts usually sign fiduciary deeds with limited or no warranties.
• An owner's title insurance policy protects your equity no matter which deed you receive. It is optional, but it is your main safety net.

What a deed does and what it does not do

A deed and a title are not the same thing. Title is your legal ownership. The deed is the paper that moves that ownership from one person to another. Our guide to deed vs. title covers that difference in more detail.

Every deed has the same basic job. It names the seller (the grantor), the buyer (the grantee) and the legal description of the land. Then the seller signs it in front of two witnesses and a notary. After closing, the title company or closing attorney records it with the Clerk of the Circuit Court in the county where the home sits. In Palm Beach County, that means the Clerk's Official Records.

What changes from deed to deed is the promise. Some deeds include warranties, which are legal promises that the title is good. If a promise turns out to be false, you may have a claim against the seller. Other deeds include no promises at all.

The three main deed types in Florida

General warranty deed

Florida Statutes section 689.02 gives a short form of warranty deed. In it, the seller says they "fully warrant the title" and will defend it "against the lawful claims of all persons whomsoever." Section 689.03 adds that a deed made in that form is a warranty deed with full common-law covenants.

In plain terms, the seller promises they own the home, have the right to sell it, and that it is free of claims not listed in the deed. That promise reaches back through the whole chain of owners. So if a problem from decades ago shows up, the seller is still on the hook. This is the deed most private homeowners give in a normal resale.

Special warranty deed: bad or just limited?

A special warranty deed uses many of the same covenants. However, it limits them to the time the seller owned the property. The usual Florida wording says the seller will defend the title against claims of people "claiming by, through, or under" the seller, "but against none other."

So the seller stands behind anything they did, such as a lien they let attach. But they make no promise about what earlier owners did. That gap is the reason buyers ask whether a special warranty deed is a bad deal.

Quitclaim deed

A quitclaim deed gives no warranties. The seller simply passes whatever interest they have, if any. That could be full ownership, a partial share, or nothing. Quitclaims are common between family members, after a divorce, or to clear up a small defect in the record. Because they carry no protection, title companies look at them closely when one shows up in the chain.

Is a special warranty deed bad for buyers?

On its own, a special warranty deed gives you less recourse against the seller than a general warranty deed. That part is true. Still, in practice the difference is smaller than it sounds.

First, suing a past seller over title is slow and costly, even with a full warranty. The seller may have moved, died or spent the money. Second, the sellers who use special warranty deeds are often banks, builders and companies. They never lived in the home and know little about its history, so they will not promise more. Finally, an owner's title insurance policy covers most of the same risks. And unlike a seller's promise, it is backed by an insurer that must pay valid claims.

So the deed form matters most when you skip title insurance. If you buy a policy and read the title commitment with care, a special warranty deed is normal and rarely a reason to walk away.

When a special warranty deed is a bad sign

There are a few cases where you should slow down. For example, be careful if a private owner who lived in the home for years refuses to give a general warranty deed with no clear reason. Also, look hard at the deal if the seller wants you to skip title insurance or use their own title company with no review. A quitclaim from a stranger, offered as the main deed in a sale, is another warning sign.

In each case, ask your agent and a real estate attorney to review the title commitment before your inspection or due diligence period ends.

Who uses special warranty and fiduciary deeds

You will see limited-warranty deeds most often in these South Florida deals.

• New construction. Developers of condos and subdivisions often convey with a special warranty deed, and it is standard in many builder contracts.
• Bank-owned and lender-owned homes. After a foreclosure, the lender or loan investor that took the home usually sells it with a special warranty deed. It never lived there, so it limits its promise to its own time as owner.
• Estate sales. A personal representative selling a home through probate signs a personal representative's deed. These deeds usually carry few or no warranties, since the PR acts for the estate and never owned the home personally. Our probate and inherited property page covers how those sales work.
• Trust sales. A trustee deed works the same way. The trustee signs for the trust and limits personal liability.
• Commercial property. Special warranty deeds are common in commercial deals of all kinds.

None of these is a red flag by itself. They are simply the norm for sellers who cannot speak to the full history of the property.

Is a special warranty deed bad if you have title insurance?

Title insurance is the piece that closes the gap. According to the Consumer Financial Protection Bureau, an owner's policy can protect you if someone later claims a right to the home from before you bought it. Examples include unpaid taxes or a contractor's lien left by a past owner.

There are two kinds of policy. Your lender will usually require a lender's policy, which only protects the loan amount. An owner's policy is optional, but it protects your own equity. The CFPB also notes that buying both from the same company usually costs less than buying them apart.

Before closing, the title company sends a title commitment. It lists what the policy will cover and the items it will not cover, called exceptions. Read the exceptions with your agent. If something odd shows up, such as an old mortgage that was never released, the title company can often clear it before you close.

Cash buyers still need a policy

If you pay cash, no lender will make you buy title insurance. That makes the owner's policy even more important, because nothing else stands between you and an old claim. This comes up often on estate sales and bank-owned homes, where many buyers pay cash.

Recording the deed and the costs that come with it

Once the deed is signed, it must be recorded to put the world on notice of your ownership. The Clerk charges a recording fee by the page under Florida Statutes section 28.24. In addition, Florida charges a documentary stamp tax on deeds. Under section 201.02, the rate is 70 cents per $100 of the price. In most Palm Beach County resales the seller pays the deed stamps by custom, but your contract controls who pays what.

The deed type does not change these costs. A special warranty deed and a general warranty deed are taxed and recorded the same way. For a full picture of what a seller pays at closing, try our seller closing costs calculator.

Sellers: which deed should you give?

If you are an individual owner selling your home in West Palm Beach, Boca Raton or Palm Beach Gardens, buyers will usually expect a general warranty deed. Offering less can make a buyer nervous and cost you leverage, so check with your closing attorney before you list.

On the other hand, if you are selling as a personal representative, a trustee or a company, a limited deed is normal. In that case, say so early in the listing and in the contract. Clear terms up front keep the deal from stalling at the title review. A title search ordered early can also flag problems while you still have time to fix them.

Frequently asked questions

Is a special warranty deed bad when buying a foreclosure?

Not usually. Lenders that sell foreclosed homes commonly give special warranty deeds, because they never lived in the property. Buy an owner's title policy and review the title commitment. Then the deed type matters much less.

Is a general warranty deed always better?

It gives you more promises from the seller, so on paper it is stronger. However, those promises are only as good as the seller's ability to pay a claim. A title policy is usually the stronger protection in practice.

Is a special warranty deed bad enough to negotiate over?

You can ask for a general warranty deed, and a private seller may agree. Banks, builders, estates and trusts rarely will. Their deed form is often set by company policy or by their role, so focus on title insurance instead.

Is a quitclaim deed safe for buying a home?

A quitclaim gives you no promises at all. It is fine for moving a home between spouses or into your own trust. For a purchase from someone you do not know, it carries far more risk unless a title insurer will fully insure the title.

Does the deed type change my property taxes?

No. Property taxes depend on the assessed value and your exemptions, not on the deed form. Documentary stamp tax is also based on the price, not the deed type.

Sources

• Florida Statutes, s. 689.02 warranty deed form
• Florida Statutes, s. 689.03 effect of warranty deed
• Florida Statutes, s. 28.24 clerk recording fees
• Florida Statutes, s. 201.02 documentary stamp tax on deeds
• CFPB, What is owner's title insurance?
• Chesser and Barr, Why all deeds are not the same
• Stross Law Firm, What is special about a special warranty deed?

This article is general information, not legal, tax or financial advice. Deed and title questions depend on your facts, so talk with a Florida real estate attorney or title professional before you sign.

Selling an estate or trust property? Pure Equity can price it, market it and keep the title work on track from listing to closing. Start with a free home valuation. Buying a bank-owned home or new build instead? Schedule a buyer strategy call and we will walk you through the deed, the title commitment and your options.