Warranty Deed vs Quitclaim Deed: What Investors Should Accept

The difference between a warranty deed vs quitclaim deed comes down to promises: a general warranty deed guarantees the seller owns the property and will defend the title against all claims, while a quitclaim deed transfers only whatever interest the seller happens to have, with no guarantees at all. For an investor, that difference decides how much title risk you are buying and how easily you can insure and resell the property later.

Most comparisons are written for family transfers, like adding a spouse to title. This one is written for investors and wholesalers: which deed you should insist on from a motivated seller, what you actually get from heirs, banks and foreclosure sales, how title insurers react to quitclaims, how state deed names differ, and why the deed type does nothing about the seller’s mortgage.

The three deeds investors see most

Deed	What the grantor promises	Where investors see it
General warranty deed	Full title covenants covering the whole history of the property	Standard resale deed in many states; what you want from a direct seller
Special (limited) warranty deed	Covenants only against defects arising during the grantor’s ownership	Bank-owned and corporate sales, many investor-to-investor deals
Quitclaim deed	No promises; conveys whatever interest the grantor has, if any	Family transfers, clearing a cloud, releases from co-owners, some heirs

General warranty deed

A general warranty deed carries six traditional covenants, as summarized by Cornell’s Legal Information Institute. Three are present covenants, breached, if at all, when the deed is delivered:

• Seisin: the grantor owns the estate being conveyed.
• Right to convey: the grantor has the power to transfer it.
• Against encumbrances: there are no liens or encumbrances other than those listed.

Three are future covenants, breached when your possession is disturbed:

• Quiet enjoyment: no one with superior title will disturb you.
• Warranty: the grantor will defend your title against lawful claims.
• Further assurances: the grantor will sign whatever else is needed to perfect your title.

Those promises run to the whole chain of title, not just the seller’s period of ownership.

Special warranty deed

A special warranty deed makes the same kinds of promises but limits them to problems created while the grantor owned the property. If a lien was filed by the owner before your seller, a special warranty deed gives you no claim against your seller. Cornell notes these deeds are common in commercial transactions, and LegalZoom describes them as common when a bank sells a foreclosed home. If you buy REO properties, expect a special warranty deed and rely on title insurance for everything before the bank’s ownership.

Quitclaim deed

A quitclaim deed says, in effect, “whatever I have, I give you.” If the grantor owns the property free and clear, you get it free and clear. If the grantor owns half, you get half. If the grantor owns nothing, you get nothing, and you have no claim against them under the deed.

State deed names are not the same everywhere

Investors who work in multiple markets run into deed forms that do not fit the three neat categories.

• California grant deed. Using the word “grant” implies two covenants under Civil Code §1113: that the grantor has not already conveyed the property to someone else, and that it is free of encumbrances made or suffered by the grantor. That is narrower than a general warranty deed, and some sources wrongly equate a grant deed with a special warranty deed.
• New York bargain and sale deed. Real Property Law §258 sets out statutory short forms, including full covenant and warranty, bargain and sale with or without a covenant against grantor’s acts, quitclaim, executor’s deed and referee’s deed in foreclosure.
• Texas deeds. Under Property Code §5.023, using “grant” or “convey” implies two covenants unless the deed expressly says otherwise. Texas practice also uses special warranty deeds and the deed without warranty, which must expressly disclaim those implied covenants.

The lesson for a remote investor: read the deed language, not just the title at the top of the form, and ask the local title company what is customary. Our state directory links to each state’s wholesaling overview.

Deeds with no warranties at all

Several deeds investors encounter come from someone who never owned the property in the ordinary sense, so they carry no warranties.

• Sheriff’s deed. Champaign County, Illinois, warns buyers that a sheriff’s deed is not a warranty deed and does not guarantee title, and is closer to a quitclaim.
• Trustee’s deed. Issued after a nonjudicial foreclosure; it conveys what the borrower had, as is.
• Tax deed. Stewart Title’s Georgia underwriting guidance describes tax-sale titles as an extra-hazardous risk for title insurers, and generally requires that redemption rights be foreclosed or a quiet title action brought before it will insure.

If you buy at a sale, plan for title work afterward. Our quiet title action guide explains the court process used to clean these titles up.

How title insurers treat quitclaim deeds

Title insurance and deed warranties are separate protections, but they interact. A deed warranty is only as good as the seller’s ability to pay a claim; a title policy is backed by an insurer. Investors buying distressed property usually care more about insurability than about the warranty itself.

Quitclaims draw attention. Stewart Title’s underwriting manual describes quitclaims in a chain of title as frequent red flags and says agents may not accept a quitclaim to vest title in a new owner unless that is customary locally or an underwriter approves. Its Florida guidance adds that agents may not insure over a quitclaim in the back chain without underwriter approval and should verify the deed with the grantor.

None of that means a quitclaim makes a property uninsurable. It means extra questions: why a quitclaim was used, whether the grantor had full title, and whether anyone else might claim an interest. An owner’s policy is also subject to its own exclusions and exceptions, as the American Land Title Association’s consumer guide explains. Our article on title insurance for investors covers which policy each party buys.

Warranty deed vs quitclaim deed: which should investors accept?

Situation	Deed you are likely to get	What to do
Buying directly from an owner-occupant	General warranty deed (or state equivalent)	Ask for it; buy an owner’s policy
Buying an REO from a bank	Special warranty deed	Expected; rely on title insurance
Buying from heirs after probate	Executor’s, administrator’s or personal representative’s deed	Confirm the court authority and every heir’s interest
Buying from heirs without probate	Often quitclaims from each heir	Title company review is essential; gaps are common
Buying at a foreclosure or tax sale	Sheriff’s, trustee’s or tax deed	Expect post-sale title work
Clearing a co-owner or ex-spouse’s interest	Quitclaim from that person	Useful and normal for this purpose
Wholesale assignment	No deed from you; seller deeds to your end buyer	Your contract should specify the deed type

Two points deserve emphasis for wholesalers.

First, your purchase contract should name the deed you expect. If the contract is silent and the seller arrives at closing with a quitclaim, your end buyer and their title company may refuse it. Our breakdown of the wholesale real estate contract shows where that clause sits.

Second, inherited property is where quitclaims cause the most trouble. A house with five heirs may need five deeds, and one missing signature can block a sale. Our guide on heirs property walks through how investors get clean title from multiple heirs. The same every-signature problem appears when a parent kept a life estate and deeded the remainder to the children.

A deed does not move the mortgage

A common misunderstanding, especially in creative deals: signing a deed, whether warranty or quitclaim, transfers ownership but does not remove the grantor from the loan. The seller still owes the lender until the loan is paid off or formally assumed.

Transfers can also trigger a due-on-sale clause. The federal Garn-St Germain Act, at 12 U.S.C. §1701j-3(d), bars lenders from enforcing due-on-sale clauses on residential property of fewer than five units in only a short list of transfers, such as transfers to a spouse or children, transfers resulting from a divorce decree, transfers on the death of a joint tenant, transfers into an inter vivos trust where the borrower stays a beneficiary and occupancy does not change, and leases of three years or less without a purchase option. A sale to an investor is not on that list. That is the central risk in subject-to real estate deals, and the deed type does not change it.

How to review the seller’s deed before you sign

Before you put a property under contract, pull the deed that vested title in your seller. It takes a few minutes at the county recorder’s website and tells you more than the seller will.

1. Match the names. The grantee on the vesting deed should match the person signing your contract exactly. Different names, a missing spouse or an LLC that no longer exists are all problems to solve before closing, not at the table.
2. Note the deed type. If your seller received a quitclaim, ask why. A transfer from a parent or ex-spouse is routine; a quitclaim from an unrelated party a few months ago deserves a closer look.
3. Compare the legal description. It should match the parcel you think you are buying, including lot lines on a survey if one exists.
4. Look one or two deeds back. A chain with several quitclaims, tax deeds or sheriff’s deeds in a short period signals an insurability question.
5. Check for open mortgages and liens recorded against the seller and prior owners, then confirm with a title company before closing.
6. Read the deed’s exceptions. Easements, restrictions and reservations listed on the vesting deed usually carry forward to you.

Deed language for your purchase contract

Your contract decides what deed the seller must deliver. A short clause avoids arguments at closing. Typical language, adapted to your state with your attorney, covers three things:

• Deed type. “Seller shall convey title by general warranty deed,” or the local equivalent such as a grant deed in California.
• Title standard. Title must be marketable and insurable at standard rates, subject only to listed exceptions such as recorded easements and current-year taxes.
• Remedy. If the seller cannot deliver that title by closing, the buyer may extend to allow a cure, accept title as is, or terminate and receive the earnest money back.

For wholesale deals, make sure the clause runs to your assignee. Your end buyer is the one who will receive the deed and the title policy, so the deed requirement in your contract is really a promise you are passing to them. Bank-owned and estate sales will usually override your form with their own addendum, so read it before you sign.

Execution, recording and transfer taxes

A deed only works if it is properly signed and recorded. Requirements vary, but the pattern is consistent:

1. Signed by the grantor and, in most states, acknowledged before a notary. Ohio’s R.C. 5301.01 is a typical example.
2. Delivered and accepted. A deed sitting in a drawer conveys nothing.
3. Recorded with the county. Recording provides constructive notice to later buyers and lenders; California’s Civil Code §1213 states the rule directly.
4. Transfer tax paid where required. Quitclaims are not automatically exempt. California allows counties to impose a documentary transfer tax of $0.55 per $500 of consideration under Revenue and Taxation Code §11911. Washington’s Department of Revenue has ruled that a quitclaim is taxable to the extent of consideration received, and that a buyer taking over the seller’s mortgage payments counts as consideration (33 WTD 632).

That Washington ruling matters for creative-finance investors: a deed taken subject to an existing loan can carry real excise tax even when no cash changes hands.

Worked example: same house, three deeds

Hypothetical figures. You buy a house for $180,000. Eight months later, a contractor’s lien of $12,000, filed two owners before your seller and missed in a sloppy search, surfaces when you try to resell.

Your deed	Claim against your seller?	Practical outcome
General warranty deed	Yes; the covenant against encumbrances and warranty covenant cover prior owners	You can demand your seller resolve it, but collecting depends on their finances; your title policy is usually the faster route
Special warranty deed	No; the lien predates your seller	Title policy, if the lien was not excepted, or you pay it
Quitclaim deed	No	Title policy if you have one; otherwise $12,000 out of your profit

With an owner’s policy that did not except the lien, all three paths end at the insurer. Without one, the deed type decides whether you have anyone to pursue. That is why experienced investors treat title insurance, not the deed, as the main protection, and still ask for the strongest deed the seller will sign. A careful title search before closing would have caught the lien in the first place.

When accepting a quitclaim is a mistake

• The grantor is a stranger to title. If the person signing is not the record owner, a quitclaim may convey nothing.
• You are paying full price. A market-price purchase should come with warranties or, at minimum, an insurable title.
• Your end buyer is financing. Their lender and title company decide what they will accept; ask before you sign.
• Heirs are involved and probate has not run. Without court authority or every heir’s signature, you may own a fraction.
• You plan a quick resale. Insurers may want time or additional proof before insuring over a recent quitclaim.

Frequently asked questions

Is a warranty deed better than a quitclaim deed?

For a buyer, yes, because it comes with promises you can enforce. For a seller, a quitclaim limits liability. In arm’s-length investor purchases, ask for a warranty deed or the state equivalent.

Can a quitclaim deed remove someone from a mortgage?

No. It removes them from ownership only. The loan stays in their name until it is paid off, refinanced or formally assumed.

Do banks use quitclaim deeds when selling foreclosures?

Banks selling REO properties usually use special warranty deeds. Sheriff’s and trustee’s deeds from foreclosure sales carry no warranties.

Can I get title insurance with a quitclaim deed?

Often, but expect extra review. Underwriters may need to confirm why a quitclaim was used and that the grantor held full title.

Does a quitclaim avoid transfer tax?

Not necessarily. Some states and counties tax quitclaims when there is consideration, including, in Washington, assumption of mortgage payments.

What is a deed without warranty?

It is a Texas form that conveys the property while expressly disclaiming the covenants Texas law would otherwise imply from the words “grant” or “convey.” It gives you no warranty claim against the seller, much like a quitclaim, so treat it the same way: confirm the grantor’s title and buy an owner’s policy.

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