How to Get Compensation for a Violation of Covenants in a Warranty Deed
Although a discussion of the differences between the various types of deeds is not particularly exciting, when a title dispute arises, you and your lawyer will take a sudden interest in the type of deed used to acquire your property. If you used a warranty deed to acquire ownership, certain covenants of warranty were created between the prior owner and you. Any compensation for a violation of a covenant created by the deed will depend on the type of warranty violated. You can seek compensation directly from the prior owner and from your title insurance company.
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Instructions
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Make several copies of your warranty deed and title insurance policy as soon as you receive information that there is a problem or defect with title to your property. You will need these as part of your demand on the prior owner and title company to address the problem.
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Prepare a letter addressed to the prior owner and your title company describing the problem. For example, an adjoining property owner may claim to have an easement over a portion of your property that was not disclosed in the warranty deed. Indicate in your letter that you consider the easement claim---or whatever your particular problem is---to be a violation of the covenants in the warranty deed and that you want the problem rectified. Send a copy of the warranty deed and title policy along with your letter. Also include in your letter any associated problems, such as a pending loan application for a refinance being held up because of a title problem.
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Seek the advice of an experienced real estate lawyer, if you cannot obtain the cooperation of the prior owner or your title company to address the problem. Provide her with a copy of your warranty deed, title policy and letter you sent to the prior owner and title company. State laws may vary, but in general you can sue the prior owner for breaching the covenants of warranty in the deed. Your compensation will usually be limited to the damages you actually incurred as a result of the breach, up to the price you paid for the property. You can also include in your lawsuit a breach of contract claim against your title company.
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Tips & Warnings
A warranty deed---also known as a general warranty deed---contains the most covenants of warranty from seller to buyer and requires the seller to compensate the buyer for any title defect, even if it occurred prior to the seller owning the property. If you sell real estate, negotiate the use of a limited warranty deed because your liability for title defects will be limited to the time period you owned the property.
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