The New "Special Warranty Deed"

By
Title Insurance

The good news is that the Limited Practice Officers of Washington now may select and prepare a Special Warranty Deed when the agreement of the parties states that form name.  The Limited Practice Board that is under the Washington State Bar Association promulgated that new form as LPB form 16-09 found on the internet at http://www.wsba.org/info/lpo-forms.htm#Word.

A real estate lawyer asked me, "How do the title insurance folks define this deed? Is it insurable? Will it break the chain of insured title?" and other very good questions.  It may be comforting to hear that title companies should be willing to let you and your clients use the new Limited Practice Board form of Special Warranty Deed. 

The bad news is that the Board changed the form that we have used for decades that stated the warranty language.  The new form has no warranty language.  It says "Special Warranty Deed" and "(Not Statutory)" as the title.  It says "bargains, sells, and conveys," but there is no promise about the condition of title given to the purchaser.   So, I cannot answer the more important questions about what warranty promises are given by this new Special Warranty Deed form.

For decades, all through my tenure as a property lawyer, Washington transactions have used a form called Special Warranty Deed that contained consistent warranty language:

The Grantor  for  [himself/herself/itself/themselves] and for  [his/her/its/their] successors in interest  [does/do] by these presents expressly limit the covenants of the deed to those herein expressed, and [exclude/excludes] all covenants arising or to arise by statutory or other implication, and [does/do] hereby covenant that against all persons whomsoever lawfully claiming or to claim by, through or under said [Grantor/Grantors] and not otherwise, [he/she/it/they] will forever warrant and defend the said described real estate.

From the time of the first promulgation of deed forms by the Limited Practice Board to be used by Limited Practice Officers until April of 2009, the LPB form of Bargain and Sale Deed used the language above rather than rely upon the statute [64.04.040] for the warranties.  Some disagree there is a difference, but I believe the statutory warranties of the Bargain and Sale Deed included a warranty promising that the grantor owned the property, but the traditional Special Warranty Deed warranty language probably does not include that warranty.  

In April, 2009, the Limited Practice Board adopted a replacement Bargain and Sale Deed [new LPB form 15-5], that no longer stated the traditional Special Warranty Deed warranty language, thereafter relying upon the statute for the warranty language.

Limited Practice Officers have not been allowed to select any form of Special Warranty Deed, even where the agreement of the parties asks specifically for that form, because the Limited Practice Board did not have a form.   People who wanted a Special Warranty Deed were referred to a lawyer to prepare the form, but often one of the parties or their agents prepared that form. 

The traditional Special Warranty Deed warranty language has been commonly used by the parties and apparently there was comfort about what the warranty obligations would be.  Therefore, I think it was appropriate for the Board to adopt a Special Warranty Deed.  Unfortunately, I think the Board erred by omitting inclusion of that traditional warranty language on the form itself.  The statutory forms may omit warranty language (as the other LPB deed forms do) because there is a statute that provides the warranty. 

I would not be able to confidently advise a client about what warranty promises are given to a purchaser by the new LPB form for Special Warranty Deed.  The apparent legal opinion of the Board is that prior case law will apply the same warranty.   Isn't it also possible that a court today would conclude that the intent of the parties is not clear? 

What will a Judge do when the grantor and grantee both testify differently about the warranty promises intended?  What if the grantor and grantee both testify that they were not familiar with the previously accepted traditional Special Warranty Deed warranty language?  Is it possible that the use of the word "warranty" in the title, means it is a full warranty deed under 64.04.030?  It is possible the use of the word "bargain" in the conveyance phrase means it is a Bargain and Sale Deed under under 64.04.040?  Is is possible the "(Not Statutory)" language means there is no warranty at all?  A Judge could say the parties chose this form, not one of the other forms, so the parties thought that there was a difference.

I'm not predicting what a judge will conclude using this new form.  Already in the public listserves, many good real estate lawyers are saying they do not know what a judge will conclude.  It therefore can be said that the use of the new Special Warranty Deed does expose the parties to a potential disagreement.

I will not have any objection to the use of the new LPB form for Special Warranty used as the basis for issuing title insurance to insure the validity of the conveyance to pass title.   I will treat it as a deed with no warranties and choose whether to require additional indemnities to the title company from the seller exactly the same as I now underwrite based on a proposed quitclaim deed.

What will the real estate sales professionals and real estate lawyers state on future Purchase and Sale Agreements as the form of deed to be used when the parties do not want a Warranty Deed, but do not accept a Quitclaim Deed because they want limited warranties?  My recommendation is to use the Bargain and Sale Deed [LPB form 15-5], and avoid the new Special Warranty Deed until the Limited Practice Board adds the warranty language.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the eye to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Topic:
ActiveRain Community
Location:
Washington
Groups:
Century 21 Active Rainers
Coldwell Banker Group
John L. Scott | Real Estate - Active Rain Bloggers
Puget Sound - WA Real Estate
Windermere
Tags:
deed form bargain and sale deed special warranty deed quitclaim deed title insurance lpb lpo

Comments 0 New Comment

Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the tree to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the cat to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Rainer
9,221

Dwight Bickel

Ask me a question
*
*
*
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the scissors to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase: