What is a warranty deed? Whether you’re selling or buying a home, eventually you will need to transfer title to the property. Like buying a car, homes and other real estate have title documents showing the current owner of the property. In real estate, these are called deeds. And just like buying a car, you can buy homes and other real estate with or without a warranty. In real estate, there are three popular types of deeds based on their warranties. Real estate deeds come with general warranties (a warranty deed), limited warranties (a special warranty deed), or no warranties (a quit claim deed). These warranties are given by the seller and guarantee the quality of the title, not the actual home or property. The deed warranty does not say the physical house is in good condition, it says that the legal ownership and title is in good condition. This guarantee of title occurs at the warranty deed transfer; the exchange of the deed from the seller’s hands to the buyer’s. Of course, the warranty of deed only comes into play when a third party challenges the proper legal ownership and title to the real estate.

This article is a primer on property warranty deeds, the warranty deed forms, the covenants on land provided by a full warranty deed, and what to do when there is a breach of covenants. If you have any questions on warranty deeds and challenges or disputes as to land title, boundaries, and encumbrances, please contact Bernhard Law Firm at www.bernhardlawfirm.com, abernhard@bernhardlawfirm.com, 786-871-3349.

1. The warranty deed and its covenants are a contract
   

Under Florida Statutes § 689.03, a statutory warranty deed conveys property with full common law covenants, contractually binding the seller and her heirs to these covenants. § 689.03, Fla. Stat. (2016); Harris v. Sklarew, 166 So. 2d 164 n.1 (Fla. 3d DCA 1964); Navajo Circle, Inc. v. Dev. Concepts Corp., 373 So. 2d 689, 692 (Fla. 2d DCA 1979) (disapproved of on other grounds) (“A warranty, whether express or implied, is fundamentally a contract.”). The word covenant simply means agreement or contract. Covenants on property, usually restrictive covenants, are agreements to use or not use the property in some specific way. Restrictive covenants on property can range across almost any use; e.g. “there shall be no swimming pools or wind chimes on this property.” The express language used to describe the property sold, not a seller’s intent, control whether a warranty arises and its terms. Carter Hawley Hale Stores, Inc. v. Conley, 372 So. 2d 965, 968 (Fla. 3d DCA 1979).

Through a warranty deed, a seller covenants and promises that: (i) she is legally entitled to transfer the whole property and no third party had legal interest in it (the covenant of the right to convey); (ii) the buyer’s right to possession will not be impacted by a third party claim (the covenant of quiet enjoyment); (iii) the seller will defend against any claims to the property from third parties and compensate the buyer for any losses they might incur as a result (the covenant of warranty of title); (iv) the seller will do whatever becomes necessary to help the buyer perfect the title should the need arise (the covenant of further assurances); (v) the seller has the very estate in quantity and quality that she purports to convey (the covenant seisin or covenant of seizin); and (vi) the land is free of restrictions to use and possession of the whole property (the covenant of no encumbrances or covenant against encumbrances).[1] These six warranties are together known as the full common law deed covenants. Thus, a deed of warranty is sometimes called a covenant deed or a guarantee deeds. A general warranty deed warrants against all claims of all persons, not just those arising by, through, or under the seller. Harris, 166 So. 2d at 165–66.

For more information on the covenant of seisin (i.e. the covenant of seizin), See also Allard v. Al-Nayem Intern., Inc., 59 So. 3d 198, 200 (Fla. 2d DCA 2011) (covenant of seisin breached where grantee did not acquire right to possess 30-foot strip of property at edge of lot conveyed); Harris, 166 So. 2d at n.2); Williams v. Azar, 47 So. 2d 624, 626 (Fla. 1950) (Where grantee only acquired partial right to possession of property under warranty deed, grantee may recover purchase money for breach of covenant of seisin; breach occurs on deed delivery); Burton v. Price, 105 Fla. 544, 546 (Fla. 1932) (where grantor fails to give possession of whole physical space originally purported to convey, grantee can recover damages for partial breach of covenant of seisin).

For more information on the covenant of no encumbrances or covenant against encumbrances, see American Title Ins. Co. v. Coakley, 419 So. 2d 816, 817 (Fla. 3d DCA 1982) (the covenant of no encumbrances provides that the land is free and clear of any encumbrances or other restrictions that impinge on possession of the whole property); Gore v. General Properties Corp., 149 Fla. 690, 696 (Fla. 1942) (an “encumbrance” within the covenant against encumbrances is every right to or interest in the land that may subsist in a third party, to the diminution of the value of the land but consistent with the passing of the fee by the conveyance); Flood v. Graham, 61 Fla. 207, 212–14 (Fla. 1911) (holding breach of covenant against encumbrances where land was subject to right in company to enjoy the benefit of oil and asphalt rights for a period of 10 years).

For more information on the covenant of warranty of title, see Brooks-Scanlon Corp. v. Arbuthnot, 94 Fla. 303, 304–05 (Fla. 1928) (covenant of warranty of title provides there shall be no disturbance of grantee’s possession by party claiming paramount title to any part thereof); Nelson v. Growers Ford Tractor Co., 282 So. 2d 664, 666 (Fla. 4th DCA 1973).

Here is a warranty deed example, specifically promising as follows:[2]

And the grantor [Enriquez] hereby covenants with the grantee that the grantor is lawfully seized of said land in fee simple; that the grantor has good right and lawful authority to sell and convey said land, and hereby warrants the title to said land and will defend the same against the lawful claims of all persons whomsoever; and that said land is free of all encumbrances

 

2. Warranty deed covenants only arise when there is a breach of restrictive covenants or you are enforcing restrictive covenants

The warranty deed covenants only come up when new owners receive a challenge to their legal ownership of the property or learn of undisclosed the restrictions, liens, or covenants on the property. When this happens, the legal effect is that the prior owner breached the warranty deed covenants by conveying property subject to claims for title, use, possession, easement, encumbrance, or removal. To enforce the deed covenants, the new owner must notify the prior owner, demand that the prior owner fix the problem, or sue the prior owner for breach of the warranty deed. To establish a breach of contract and property covenants, a party must show the existence of a contract (the warranty deed), a breach thereof, and damages. AIB Mortg. Co. v. Sweeney, 687 So. 2d 68, 69 (Fla. 3d DCA 1997) (holding plaintiff stated prima facie breach case where it pled these elements).

Although breaches are only discovered after conveyance, the legal breach of a warranty deed covenant occurs upon execution and delivery of the deed, as the seller at that time fails to convey full possession or right of possession and use free from future claims by third parties. Williams, 47 So. 2d at 626 (“when a grantee . . . acquires no possession and no right of possession under a deed containing covenants of seisin . . . the breach occurred upon execution and delivery of the conveyance.”); see also Allard, 59 So. 3d at 200 (holding covenant of seisin breached where grantee did not acquire right to possess 30-foot strip of property at edge of lot conveyed). Breach occurs even where the seller does not have actual or constructive knowledge of the encumbrance, claim, or issue when she conveys the property. See Pathare v. Goolsby, 602 So. 2d 1345, 1346–47 (Fla. 5th DCA 1992) (holding seller liable for breach of warranty deed even though seller had no actual or constructive knowledge of encumbrance).

 

3. Examples of breaches to warranty deeds and deed covenants

Under Florida law, where there is a disturbance to a buyer’s possession, use, and quiet enjoyment by a party claiming paramount title to any part of the property, the covenants of warranty of title and quiet enjoyment are breached. See Arbuthnot, 94 Fla. at 304. Where a buyer only acquires partial right to possession of property, the covenant of seisin is breached. Williams, 47 So. 2d at 626. Where the seller fails to provide possession of the whole physical space that she originally purported to convey, the covenant of seisin is breached. Burton 105 Fla. at 546.

Where a third party claims a right or interest in the property or a portion thereof, the covenant of no encumbrances is breached, relating back to when the deed was delivered, and a right of action immediately accrues. Coakley, 419 So. 2d at 817 (covenant of no encumbrances provides that the land is free and clear of any encumbrances or other restrictions that impinge on possession of the whole property); Gore, 149 Fla. at 696. An “encumbrance” within the covenant against encumbrances includes every right to or interest in the land that may subsist in a third party. Id.; Flood, 61 Fla. at 212–14 (holding breach of covenant against encumbrances where land was subject to right in company to enjoy asphalt rights for a period of 10 years).

Where the quality and propriety of title conveyed requires reference to parol evidence or other records, the burden is on the seller to produce or supply such evidence; even where the purchase contract requires a title search of the record, the burden to supply necessary evidence in completing good title and possession to property should not be on the buyer, who is a total stranger to the history of the land, its title, and its possession. Nelson v. Laing, 298 So. 2d 536, 537 (Fla. 1st DCA 1974) (holding party breached realty contract where it did not furnish abstract showing good and marketable title and evidence outside of deed abstract was required to determine existence and state of encroachment on the property).

Thus, for example, the covenant against encumbrances would be breached by the existence of any outstanding easement rights that diminish the value of land conveyed. Abstract Co. of Sarasota v. Roberts, 144 So. 2d 3, 4–5 (Fla. 2d DCA 1962); Brewster v. Wegman, 199 So. 2d 337, 338 (Fla. 2d DCA 1967) (holding where easement was of record but was not visible upon inspection of land, existence of easement was breach of general warranties in deed, including the covenant against encumbrances). Similarly, the covenant against encumbrances would also be breached if a seller did not proactively disclose a right-of-way used by an adjacent property, even if it were evidenced by a recorded instrument—this would legally constitute an undisclosed encumbrance entitling the buyer to damages from any seller who represented otherwise. Marler v. Barr, 248 So. 2d 183, 184–85 (Fla. 1st DCA 1971).

In sum, a warranty deed guarantees the good title and ownership of the property on the date of the deed. If it turns out that the title and ownership is not as guaranteed, a purchaser may have a claim for breach of the warranty covenants. If you have any questions on warranty deeds and challenges or disputes as to land title, boundaries, and encumbrances, please contact Bernhard Law Firm at www.bernhardlawfirm.com, abernhard@bernhardlawfirm.com, 786-871-3349.

[1] See also American Title Ins. Co. v. Coakley, 419 So. 2d 816, 817 (Fla. 3d DCA 1982) (the covenant of no encumbrances provides that the land is free and clear of any encumbrances or other restrictions that impinge on possession of the whole property); Gore v. General Properties Corp., 149 Fla. 690, 696 (Fla. 1942) (an “encumbrance” within the covenant against encumbrances is every right to or interest in the land that may subsist in a third party, to the diminution of the value of the land but consistent with the passing of the fee by the conveyance); Flood v. Graham, 61 Fla. 207, 212–14 (Fla. 1911) (holding breach of covenant against encumbrances where land was subject to right in company to enjoy the benefit of oil and asphalt rights for a period of 10 years).