Also called a limited warranty deed, the special warranty deed may be used if the grantor (seller) does not want to assume all the risk and liabilities of a general warranty deed. Some states call this a grant deed.
The special warranty deed usually does offer limited covenants of seizin and against encumbrances . So the grantor assures valid possession and ability to convey title, but limits guarantees about encumbrances to the period that the grantor actually owned the property. An "as is" or bankruptcy sale of a property will often use a special warranty deed.
For example, Jack buys a house from Jill. Jack later sells the property to Spot with a special warranty deed. If Jack had taken out a mortgage loan shortly before selling it to Spot and did not disclose it—and that mortgage places a lien against Spot's property—Jack is still liable. However, if it comes to light that Jill had secretly sold interest to the property before selling it to Jack and that other party now challenges Spot's title, then the special warranty deed relieves Jack of any liability.
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