PSI Virginia Real Estate Practice Exam

Which statement is true regarding Special Warranty Deeds?

1. They protect against all prior encumbrances

2. They only cover issues that occurred during the grantor's ownership

3. They are the same as General Warranty Deeds

4. They require the grantor to clear any title defects

The correct answer is: They only cover issues that occurred during the grantor's ownership

Special Warranty Deeds are unique in that they provide a limited warranty of title. They specifically protect the grantee (the party receiving the property) only against defects or claims that may have arisen during the period of the grantor's ownership. This means that the grantor is only willing to guarantee the title against issues that may have occurred while they held the property. This is different from a General Warranty Deed, which offers a broader protection that covers all claims, even those arising before the grantor's ownership. Because of this limited scope, the grantee cannot hold the grantor liable for any encumbrances or issues that existed prior to the time the grantor took ownership of the property. Understanding the implications of a Special Warranty Deed is crucial for buyers. They need to be aware that while they do receive some level of protection, it is not as comprehensive as that provided by a General Warranty Deed. Therefore, when engaging in a transaction involving a Special Warranty Deed, it is advisable for the buyer to conduct thorough due diligence concerning any potential title issues that may predate the grantor's ownership.