Warranty of title
| Warranty of title |
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Warranty of title is used to guarantee that seller has right to transfer the ownership of the property and no one else has right to that property. It can also guarantee other rights (copyright, trademark, etc.).
Usually warranty of title is part of warranty deed or special warranty deed. It is important to make sure before transaction that no one else, e.g. tax office or ex-spouse has rights to the property. The warranty of title cannot be given in case of sheriff's sales when seller acts as representative. But in that case warranty is backed by the court.
The brief explanation of the Warranty of the title term
Warranty of title is a term which is related to the guarantee given to the buyer by the seller who has the right to, and who during the sale transaction, transfer the ownership of the property. By giving the warranty of title, seller assures the new owner that the estate does not belong to any other legal parties who may have any patents, trademarks right or copyrights to the property which is the subject of the transfer. The selling party shall also guarantee that the estate is free of any mortgages, liens or encumbrances which may affect the new owner adversely. In cases where the seller conceals the fact that the subject of the sale has any liens, the buyer who unknowingly buys the property is not responsible to pay the additional costs. The responsibility lies on the behalf of the seller who must provide the financial liability connected to the settlement of any claims which are related to the sold property[1].
The beginning of the term called Warranty of title
The term warranty of title fist occurred during the lawsuit in 1585 which was called Dale's Case. This case was related to the action of selling the goods which did not belong to the defendant. The main problems lied in the definition of “scienter” action of the selling party. This case brought many disputes of the judges who had a different view of the fact of affirmation related to the certain goods which were the subject of this case. After many discussions related to this issue, finally, the judges agreed that the sales of goods must be made with a good faith of the selling party and from that basis, the term of the warranty of title emerged. In the ancient times, the warranty or title was also closely associated with the warranty of quality and stood on this same basis. However, nowadays the term of the warranty of title is commonly referred to the very fact of selling itself[2].
The connection of the Warranty of title to Deed forms
Contemporarily the warranty of title is taken into account in three-forms of deed, which apply to the legal transfer of the property in the process of sale. There are three most common types of deed forms which are called: warranty deeds, special warranty deeds and quitclaim deeds. The main distinction between above-mentioned types of deeds lies, in fact, in the matter of the warranties of title[3].
The exceptions of obtaining the Warranty of title
Moreover, in the sales such as auctions estate sales or police sales, do not include the warranties of title. This situation occurs due to the fact that these instances, such as mentioned above, in some cases are not the legal owners of the properties, it may happen in relation to the right owner's death or the confiscation of the estate, which made those sellers only the authority to act as the representatives. Every once in a while, the warranty is provided by the court. In some cases, the buyer of the particular property who purchase the foreclosed estate must pay all indebtedness which after the transaction becomes his own debts[4].
What type of risk does the Warranty of title protects againts?
It is also significant to underline the risk which occurs in relation to lack of the warranty of title in the sale transfer. The main danger is related to:
- the liens which occurred in the prior owner's faults,
- thelegal restriction,
- the unsolved inheritance affair
- the ex-spouse right to the property which has been disclosed by the seller
In the event when the mentioned characteristic appears the particular real estate has “unclear title” which may result in a very expensive and time-consuming legal actions leading to its dissolution according to the law[5].
Examples of Warranty of title
- A warranty of title is provided when a seller transfers physical property from one person to another. For example, when a person purchases a car from a dealership, the dealership provides a warranty of title that guarantees the buyer has the right to the car and no other person has any claim to it.
- A warranty of title is also provided when a seller transfers intellectual property from one person to another. For example, when a person purchases the rights to a song from a songwriter, the songwriter provides a warranty of title that guarantees the buyer has the right to the song and no other person has any claim to it.
- A warranty of title is also provided when a seller transfers real estate from one person to another. For example, when a person purchases a house from a homeowner, the homeowner provides a warranty of title that guarantees the buyer has the right to the house and no other person has any claim to it.
Advantages of Warranty of title
Warranty of title provides several important advantages for both buyers and sellers. These include:
- It provides legal protection to both buyers and sellers from any claims of ownership or other rights. This ensures that the seller has the right to transfer the property to the buyer without any potential issues.
- It also serves to protect the buyer from potential legal action from third parties, as any claims against the property are addressed before the sale is completed.
- Warranty of title also helps to ensure that the buyer will receive the full value of the property, as there are no hidden costs or issues related to the title.
- Finally, it allows the buyer to have greater confidence in the purchase, as they know that they are not buying a property with any potential problems associated with the title.
Limitations of Warranty of title
Warranty of title comes with certain limitations. These limitations include:
- It does not protect from claims from third parties such as creditors or other claimants who may have an interest in the property.
- It does not guarantee that the title is free from encumbrances or liens.
- It does not guarantee that the title is good and marketable or that the title is free from any defects or claims.
- It does not guarantee that the property is free from any taxes or royalties.
- It does not guarantee that the property is free from any zoning or other legal restrictions.
- It does not guarantee that the property is fit for the purpose intended.
- It does not guarantee that the property is of merchantable quality.
- It does not guarantee that the property is free from any environmental or other contamination.
Warranty of title is used to guarantee that seller has right to transfer the ownership of the property and no one else has right to that property. Other approaches related to warranty of title include:
- Right to quiet possession: This approach is used to guarantee that the buyer will not be evicted from the property by any third party.
- Right to defend title: This approach is used to protect the buyer from any legal actions taken against them by a third party because of the title of the property.
- Right to transfer title: This approach is used to ensure that the buyer will be able to transfer the title of the property without any issues or challenges from any third parties.
- Right to warranty against encumbrances: This approach is used to guarantee that the property will not have any hidden encumbrances that could affect the buyer's ownership over the property.
In conclusion, warranty of title is an important protection for buyers of property, and there are several approaches that are related to this warranty. These approaches are used to guarantee the rights of the buyer to quiet possession, title defense, title transfer, and warranty against encumbrances.
References
- Ames J.B.(1888).The History of Assumpsit. I. Express Assumpist. Harvard Law Review, Vol. 2, No. 1 (Apr. 15, 1888), pp. 1-19.
- Circo C.J.(2017).Interpreting Stale Preferential Rights to Acquire Real Estate: Beyond the Restatement of Property. Vill. L. Rev., 62, 603.
- Donald J.Smythe.(2016).Clearing The Clouds On The CISG’S Warranty Of Title, 36 Nw. J. Int'l L. & Bus. 509.
- Hogg J.E.(1918).Registration of Title to Land. The Yale Law Journal, Vol. 28, No. 1 (Nov., 1918), pp. 51-58
- Leonard L.(1983).Warranties of Title - A Modest Proposal. 29 Vill. L. Rev. 649.
- Williston S.(1911).for Honest Misrepresentation. Harvard Law Review, Vol. 24, No. 6 (Apr., 1911), p. 415-440.
Footnotes
Author: Magdalena Czajka
