YOU ASK:

Is title insurance as good as a warranty deed?

WE ANSWER:

No, both are different.

A warranty deed is a legal instrument that details the transfer of ownership from one party to another. This document is delivered upon the closing of the real estate deal. It should be properly witnessed and signed in accordance to the applicable state laws. The deed is also recorded in the courthouse of the county where the property is located.

In the warranty deed, the grantor of the deed (the seller) guarantees that the title of the property does not have any encumbrances or claims. With a warranty deed, the seller declares that all mortgages and liens in the property are cleared.

The warranty deed also holds the seller responsible for any problems with the title that were caused during the time the property was in his possession. This is because there are a number of things that can happen to cause some problems with the title.

The seller may grant an easement to the property. He may also incur some debts such as unpaid taxes, unpaid homeowner's dues, and other outstanding accounts that may cause a lien to be attached to the policy.

This, in short, is a promise from the seller that he has legal ownership and that it is clear from mortgages, liens or any other claims that may affect the ownership of the buyer. In a warranty deed, the seller is held liable for damages if a problem is discovered with the title.

This is different from title insurance. This only protects you against such claims, but does not involve the transfer of the property from the seller to the buyer. This also protects from previous claims, not just from the seller's side, but from other third parties, as well as government regulations and zoning codes.

A warranty deed is no substitute for title insurance.

Even if you already have a warranty deed, it is still recommended that you get title insurance. The warranty deed loses much of its effectiveness when the seller or the grantor of the warranty deed declares bankruptcy or dies. Then you can't claim against the warranty deed, but you can claim against your title insurance.

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