Warranty of Title: What it Means, How it Works

What Is Warranty of Title?

A warranty of title guarantees that the seller has the right to transfer ownership and no one else has rights to the property. It may also guarantee that no other party has copyright, patent, or trademark rights in the property being transferred.

Understanding Warranty of Title

A warranty deed includes a formal warranty of title, legally transferring property in a sale. This document guarantees the seller’s legal right to transfer the property and protects the buyer from any claims or liens others may have against the property. A warranty deed provides the buyer with legal recourse if any entity tries to make a claim to the property.

Other types of deeds, like a quitclaim deed, do not provide a warranty of title. These deeds do not guarantee a clear title and the buyer does not have the 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 automatic. However, if the seller is acting as a representative, a warranty of title may not exist. This situation can occur in auctions, sheriff’s sales, or estate sales, where the seller is not the owner and may not be aware of any other entity’s rights in the property.

A warranty of title allows the buyer to sue the seller if a claim or issue arises with the property. For instance, if an heir of a prior owner has an unresolved claim to the property, the buyer can pursue legal action to recover the money spent on the purchase.

Completing a transaction may also involve risks such as disputes about property boundaries or existing liens for unpaid bills and taxes.

If the property is free of impairments and ownership is properly established, then a clear title can be offered by the seller without any encumbrances.

If the property is free of impairments and ownership is properly established, then a clear title can be offered by the seller without any encumbrances.