Statutory warranty deeds

I don’t know how many real estate transactions involve a transfer of property by a statutory warranty deed. I suspect it must be close to 90%.

How many sellers know that a statutory warranty contains warranties that they are making to the purchaser? How many sellers know that the purchaser might come back to them, sometimes after several years, and claim that one or more of the warranties have been breached?

I suspect very few.

When you are selling or buying real estate, be aware that there are different kinds of deeds.

If a statutory warranty deed is to be used, emphasis should be on the WARRANTY not the deed. Ask yourself if you are comfortable making the warranties contained in the deed.

In Washington when a grantor (seller) delivers a statutory warranty deed, the grantor warrants “(1) That at the time of the making and delivery of such deed he was lawfully seized of an indefeasible estate in fee simple, in and to the premises therein described, and had good right and full power to convey the same; (2) that the same were then free from all encumbrances; and (3) that he warrants to the grantee, his heirs and assigns, the quiet and peaceable possession of such premises, and will defend the title thereto against all persons who may lawfully claim the same, and such covenants shall be obligatory upon any grantor, his heirs and personal representatives, as fully and with like effect as if written at full length in such deed.” RCW 64.04.030. A warranty deed has nothing to do with the quality or condition of the improvements—the warranties affect title only.

What does this mean?

Perhaps grantors are most surprised, when years after the sale, a buyer comes back to them and tells them that a neighbor is making a claim to a portion of the property based on adverse possession. Because one of the warranties in the warranty deed is to “defend the title thereto” the seller may be forced to defend against the adverse possession claim. This is not merely an inconvenient matter. Attorney fees in defending an adverse possession claim can reach into the tens of thousands of dollars.

In addition to defense costs, a grantor may be forced to pay to the buyer a sum to compensate for any property lost to the adverse claimant.

If you are buying or selling real estate, pay attention to the form and language in the deed being used. If you have questions, call an attorney.

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