Certified Residential Appraiser Practice Exam

What does a warranty deed assure the grantee?

1. Title with some encumbrances

2. No encumbrances, unless stated

3. Ownership rights only for a limited time

4. Title that may have hidden claims

The correct answer is: No encumbrances, unless stated

A warranty deed provides the grantee with the assurance that the title to the property is transferred free of encumbrances, except those that are explicitly stated in the deed. This means that the grantor guarantees that they hold clear title to the property and has the right to sell it. If any problems arise later, such as claims from third parties, the grantor is typically responsible for addressing these issues. This level of protection and assurance is a key feature of warranty deeds, making them the most favorable type of deed for real estate transactions. In contrast, other options present conditions that do not align with the assurances provided by a warranty deed. For example, the notion of having ownership rights only for a limited time does not reflect the permanence usually associated with property ownership through such a deed. Similarly, stating that the title may have hidden claims contradicts the primary assurance that any existing claims or encumbrances would be disclosed, and not allowed unless noted in the deed. The idea of title with some encumbrances also does not hold true for a warranty deed, which promises a clean title barring any disclosed issues.