What is Warranty of Title?

A warranty of title is commonly used in the real estate and mortgage industries, although, it can sometimes be used in a business arrangement. A warranty of title is an assurance given by the seller of a property that he has the right to sell or transfer ownership of the property. This warranty guarantees that no other person has rights to the property being sold.

How Does Warranty of Title Work?

In a formal arrangement, every warranty deed must contain a warranty of title, this is a proof that the person transferring the property holds the rights to do so and no other person does. A warranty of title serves as a guarantee to a buyer that the property being transferred is owned by the seller and no other person has claims to the property. A warranty of title provides the buyer with the peace of mind needed over the property.

How a Warranty of Title Is Used to Confirm a Transaction

A warranty of title is present only if the seller has exclusive rights to the property and rights to transfer the ownership of the property. If the seller is representing the legal owner, a warranty of title might not be present. In a real estate transaction that entails transferring the ownership right of a property, a warranty of title is required. This serves as a confirmation that the seller has the right to sell the property. If after ownership of the property has been transferred, a third party comes up with claims on the property, the buyer can sue the seller using the warranty of title.

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