We recently closed a transaction where the seller contracted to convey by Special Warranty Deed rather than General Warranty Deed. Upon examination of the prepared Special Warranty Deed at closing, the deed didn’t look much different to the seller than a General Warranty Deed – except of course the title of the document “Special Warranty Deed.” So, “what’s the difference?” she asked.
Three Common Types of Deeds
Colorado recognizes several types of deeds to transfer real property. I’m going to discuss the three most common types: General Warranty Deed, Special Warranty Deed, and Quit Claim Deed. Just from the names, you might guess that a buyer would probably want something with the word “warranty” in the title. Warranty sounds a lot better than “Quit.” Nobody likes a quitter. But which is better for the buyer, a “special” warranty or a “general” warranty. Although receiving something “special” might sound better, in the case of a buyer of real property you probably want a “general” warranty.
General Warranty Deed
The form of general warranty is actually dictated by the Colorado legislature at C.R.S. 38-30-115. In substance, it’s a transfer by the grantor that promises three things (1) that the grantor is the owner with full power to sell, (2) that the property is transferred free and clear of encumbrances (except those identified), and (3) that the grantor will defend title against anyone claiming an interest in the property. The third promise is what differentiates a general warranty deed from a special warranty deed.
Special Warranty Deed
With a general warranty deed the warranty language states “and warrants title to the same.” This means that the warranty of title is going way back in time to people who might claim an interest in title before the seller bought the property. With a special warranty deed, the language is changed to “and warrants title to all persons claiming under me. This “under me” part means that the warranty is limited to claims against title during the time the seller owned the property, and not before.
Wouldn’t it be nice if the special warranty form simply said, “ this warranty is limited to claims related only to when I held title”? Oh, but that would be too easy. We used to say in law school that we were learning to be interpreters of a different language. The phrase “under me” in the special warranty deed is the perfect example.
Quit Claim Deed
By contrast to a warranty deed, a quit claim deed warrants nothing. Instead of the magic words “sell and convey” a quit claim deed uses the words “sell and quitclaim.” A quit claim deed also contains no warranty language. The legal effect is that a quit claim deed simply transfers whatever interest the grantor has in the property. That interest may be something, but if it turns out to be nothing the grantor is not on the hook to defend title.