What Is Warranty of Title?
Let me explain what a warranty of title really means. It's essentially my guarantee as a seller to you, the buyer, that I have the full legal right to transfer ownership of the property, and no one else has any claims or rights to it. This can also extend to ensuring no other party holds copyright, patent, or trademark rights in the property being transferred.
Understanding Warranty of Title
You should know that a formal warranty of title appears in a warranty deed, which we use to legally transfer property in a sale. This document assures you that I, as the seller, have the legal authority to hand over the property, and no other entity—like the IRS or an ex-spouse—has a lien or claim against it. If someone later tries to claim the property, this warranty protects your interests and gives you the right to take legal action against me.
Contrast this with other deeds, such as a quitclaim deed, which doesn't include a warranty of title. In those cases, there's no promise of a clear title; I'm just signing away my interest in the property. If ownership issues come up later, you won't have the same protections that a warranty of title provides.
How a Warranty of Title Is Used to Confirm a Transaction
In most sales, a warranty of title is automatically part of the deal, but if I'm acting as a representative rather than the owner, there might be no such warranty. This often happens in scenarios like auctions, sheriff's sales, or estate sales, where the seller isn't the actual owner and might not know about any other claims on the property.
With a warranty of title, you as the buyer gain the ability to sue me if a claim or issue arises with the property. For instance, if an heir from a previous owner surfaces with an unresolved claim that I didn't disclose, you could take me to court to recover your purchase money plus any damages.
Other risks in transactions include disputes over property boundaries, where neighboring owners might argue the lines differ from what I showed you. There could also be liens from unpaid bills or taxes, adding complications. If the property is entirely free of such issues and ownership is solidly established, then it has a clear title, and I can provide a warranty without any encumbrances.
