Dallas-Fort Worth Real Estate Investor Club

I'll start with my usual disclaimer that I'm not an attorney nor am I giving legal advice.  With that said, it is my opinion that some Wholesalers might find it appealing to use a Special Warranty Deed, because it only warrants that nothing has happened to encumber the title while they've owned the property whereas a General Warranty Deed warrants that the title is clear even prior to the ownership period of the current owner.  Of course, this would likely only apply if a simultaneous closing is planned, because, in that case, a Wholesaler would be in the chain of title for at least a few minutes.  If the contract is being assigned, the Wholesaler won't ever be in the chain of title, so they should only insist on a Special Warranty Deed if the seller insists on it.  If the seller insists on a Special Warranty Deed rather than a General Warranty Deed, I'd ask them to explain why.  I'll see if I can get a Title Attorney to jump in here to give us an even more informed opinion on this.  Good question, Bill!

The type of deed to be used is specified in the contract; the title company doesn't choose.

Though I'm not a lawyer, my understanding matches Robin's:  in short, that the Special Warranty Deed exposes the seller to less risk than the General Warranty Deed.  Therefore, I assume the wholesaler is thinking that this is a better way to contract and would make his/her contract that much more marketable to investors even if just assigning the contract.  

I routinely use Special Warranty Deeds, have never had a title company question it and have never had a problem with a Buyer accepting it once I explained it.  (If a Buyer did have a problem, I'd use a General Warranty Deed; I'm never going to lose a Buyer fighting over this point.)

Question:  does anyone familiar with the deed types recommend General Warranty Deeds because they can cite advantages not previously discussed?  I'd always prefer to be called out for a gap in my understanding than be allowed to continue in ignorance.

I don't quite have the guts to buy on the courthouse steps.  :)  I also understand that for awhile it was hard to get a good deal there due to out-of-towners running up the prices.  Kudos to you for making the business model work.

I also use the standard TREC document, but am open to amending provisions if it creates the best win-win situation possible.  I always go through the contract with the other party whether I'm buying or selling and I'm always transparent and truthful when explaining how its filled out.  If I come across a buyer or buyer's lender who wants a General Warrangy Deed, I'll use the standard language.  (So far all of my sales have been owner-finance so lender requirements haven't been an issue.)

All of my transactions are done at a title company and so have had the chain of title professionally researched before I buy and sell.  Since I don't know how to assess the risks associated with a clouded title, I don't think I'd buy a property with clouded title, and so would never hesitate to sell with a General Warranty Deed if asked.

Ultimately, I think the best wisdom for a buyer is to get a title insurance policy.  Furthermore, there are certain title companies who will, with sufficient documentation, allow the purchase of a title policy at closing for the market value of a property rather than just the purchase price.