Buying a Home: Why Legal Help Matters

When a property title or deed is transferred from one party to another, there is some sort of affirmation that certain aspects of the title are okay. At a real estate law firm, this is referred to as the warranty. It's not quite like the warranty you might get for an appliance or a car, though, and it comes in a lot of varieties. Here are three things you'll want to understand whether you're a buyer or seller of a property.

Types of Deeds

Deeds come in four main types. First, there are general warranty deeds, and these are accompanied by the broadest warranties. Second, there are deeds with special warranties, and they're usually attached to sales with unique conditions. Third, there are deeds held by trusts. Finally, some deeds are being executed by court order.

Encumbrances

An encumbrance is anything that might limit your use or enjoyment of the property. These are listed with the title, and they're generally treated as exceptions to or limitations of the warranty. If there is an outstanding mortgage or lien on the property, that's an encumbrance. You might encounter this issue if you're taking over a mortgage as part of the purchase. The limitation on the warranty simply means the buyer is not liable for anything arising from the encumbrance.

Easements are also classified as encumbrances. An easement is a grant of rights to a third party. For example, a neighbor might provide an easement for a path on their property so the person living next door can get in and out. If the easement is not terminated upon transfer of the title, it should be listed as an encumbrance.

Warranty of the Title Itself

When you transfer the title to a property, the goal is usually to come away with a clean title. If the title is fully warranted, you will have the right to pursue legal action against the seller. However, if there is no warranty or a limited warranty on the condition of the title, you may have fewer legal options as a buyer.

Why Would Anyone Buy a Title Without a Warranty?

First, the sale price is probably going to be cheap. Second, some people have to sell under odd circumstances.

For example, someone might file what's called a quitclaim to abandon a property. In this scenario, they affirm only that they had an interest in the title. However, you can then use the unwarranted title and the quitclaim as evidence in court to try to cure a title defect. Once a court has ordered a title cure, it becomes a clean title.

To learn more, contact a real estate law firm.