A couple hundred years ago, not too many people owned their own land. Those that did, were either hardy souls who carved their homestead out of the wilderness, or were able to purchase it at considerable expense. In a word, they were reasonably wealthy if they were able to afford private ownership.

    Things started to change when the population began to expand. Unscrupulous people sold property they didn’t own. The warranty deed evolved from this ensuing climate of distrust. When someone sold a piece of property, he frequently had to guarantee that the title to it was good. If someone else came along and said that they owned that property, the original owner was obligated to clear up any claims that might arise. After most of the sales, nothing happened, but sometimes there was an unknown heir, or perhaps a person with a land grant from some foreign government. Whatever the cause, the seller normally guaranteed the title. His word was usually good, and although it might have been expensive, he would have done whatever was necessary to secure a clear title.
 

    Now let’s jump ahead to today. Today, most people are able to purchase a home. Almost all of the existing home sales are by everyday people. Let’s take a look at exactly what you are signing when you sell your house on a warranty deed. The laws in the various states all differ, and there may be some types of deeds with which I am not familiar, but most states have some form of guaranteed or warranty deed. If you sign that deed when you sell your house, guess who is responsible to make the title good if anything should show up in the future. Exactly. You are. But wait, you say. I’ve bought and sold several houses and I know many other people who have also done that, and they never had any problems. You’re right.
 

    Or maybe you aren’t. In many parts of the country, it is a customary practice to have a title insurance company write a policy guaranteeing that if there is anything wrong with your title, they will fix it. However, don’t hold your breath. In two recent claims against the title company, it took them over a year to settle. Let’s get back to the point of this article. If it turned out that there was a problem with the title to a house you just sold, could you afford to make it good or refund the entire purchase price? Most of us couldn’t. You would probably have to file for bankruptcy protection.

    Well, what are the chances that there will be a problem with the title? Would you believe we have seen errors in almost half of the titles researched? Granted that most of the errors are minor and if desired, can be corrected fairly quickly, and without too much expense. But it will be your responsibility to pay whatever it costs if you sell a property on a warranty deed. It is a holdover from a period when landowners were generally wealthy and could afford to make the title good.

    If the purchaser needs some kind of reassurance, let him buy a title policy. They cost about fifty dollars plus four dollars per thousand. In other words, a title policy guaranteeing the title to a $200,000 house would cost about $850. As closing costs go today, that might be a very worthwhile investment, even if it had to be paid by the seller.

    In some states, the closing attorney will give his opinion of the title, and will usually correct any defects that later appear. Nevertheless, it appears that a quit claim deed may be a better instrument to transfer your property. In most states, it transfers complete ownership in the same manner as a warranty deed, but usually without any future obligations. Discuss the warranty responsibility with your attorney along with the possibility of using a quit claim deed. Be prepared to ask questions. Your attorney has probably always used some form of warranty deed and will likely be hesitant to change, but be certain he has a good reason. It might be a very costly mistake to sign that warranty deed.