National Real Estate Practice Exam

What distinguishes a Special Warranty Deed from a Warranty Deed?

1. It covers the entire ownership period

2. It only covers the time when the seller owned the property

3. It provides no protection

4. It requires no acknowledgment by a notary

The correct answer is: It only covers the time when the seller owned the property

A Special Warranty Deed is specifically designed to provide limited guarantees about the title of the property. The primary distinction of this type of deed is that it only covers the period during which the seller owned the property, offering assurances against any claims that may arise from the seller's own actions or omissions. This means that the seller is essentially providing a limited warranty, focusing solely on their ownership duration, which differentiates it from a standard Warranty Deed. A Warranty Deed, on the other hand, typically guarantees that the seller holds clear title to the property throughout the entire ownership period, providing a broader scope of protection for the buyer. The implications of the Special Warranty Deed are significant for buyers since they are not protected against claims that may result from prior owners or defects prior to the seller's ownership. Thus, the correct understanding of a Special Warranty Deed is that it is limited to the time when the seller owned the property, establishing a clear line of accountability that may not apply to prior ownerships.