National Real Estate Practice Exam

Which deed provides limited warranty only for defects occurring during the seller's ownership?

1. Quitclaim Deed

2. Warranty Deed

3. Special Warranty Deed

4. General Warranty Deed

The correct answer is: Special Warranty Deed

The special warranty deed is the type of deed that provides limited warranties, specifically for defects that may have arisen during the seller's ownership of the property. This means that the seller guarantees that they have not caused any defects or encumbrances on the title during the time they owned the property, but they do not make any promises regarding issues that may have existed prior to their ownership. This form of deed is often used in commercial transactions and can be advantageous for sellers who prefer to limit their liability. It offers some protection to the buyer, as it assures them that the title is clear of issues that occurred while under the seller's control, but it does not provide a blanket guarantee for the entire history of the property. In contrast, the general warranty deed offers comprehensive guarantees that cover the entire history of the title, including defects that may have occurred before the seller's ownership. The quitclaim deed, on the other hand, provides no warranties at all and simply transfers whatever interest the seller has, leaving the buyer with no assurances about the title. The warranty deed typically provides elements of a general warranty deed but does not imply the same level of coverage of past defects as the special warranty deed does.