In the approved offers to purchase, one section in particular may be glossed over but may carry great importance when the closing rolls around and the deed is given. The Conveyance of Title section indicates:
“Upon payment of the purchase price, Seller shall convey the Property by warranty deed (trustee’s deed if Seller is a trust, personal representative’s deed if Seller is an estate or other conveyance as provided herein) free and clear of all liens and encumbrances, except: municipal and zoning ordinances and agreements entered under them, recorded easements for the distribution of utility and municipal services, recorded building and use restrictions and covenants, …”

This all seems fairly straightforward in that the buyer pays the purchase price and in return receives the deed to the property — that is until an attorney representing a party to the transaction holds out his or her hand and says, “stop the closing! This is the wrong type of deed!”
When this reference is made to the wrong type of deed, what does that attorney mean? If the attorney is representing the seller, it likely means that the seller is being asked to give a warranty deed when, due to the status of the seller, a different type of deed without warranties should be used. If the attorney is representing the buyer, the shoe may be on the other foot: the buyer was expecting a warranty deed but is instead being given a deed with lesser protections. For example, the title to the property was actually held by a trust, but the offer calls for a warranty deed. The trustee is unable to warrant title and must use a trustee’s deed, but the buyer’s attorney insists upon a warranty deed because that is what it says in the offer. It should be no surprise that this leads to confusion and drama between the parties at closing. 

And so we embark upon solving the mysteries of the different types of deeds that might be used in a transaction and what can be done by licensees to make sure that the offer is properly drafted so everyone knows in advance what kind of deed will be used at closing.

Types of deeds

The first distinction to make with deeds is between warranty deeds and quitclaim deeds. 

Warranty deed
In a warranty deed, the seller guarantees that the seller’s title to the property is “free and clear of all liens and encumbrances,” except any encumbrances expressly mentioned in the offer and in the deed. This warranty guarantees the seller’s ownership rights, not the absence of property defects and not the quality of any improvements to be constructed on the land. As described in Wis. Stat. § 706.10(5), a warranty deed means that the seller has lawful title to the property and good right to convey that title. That deed warrants that the title is clear, subject to the standard exceptions: municipal and zoning ordinances and agreements entered under them, recorded easements for the distribution of utilities and municipal services, building restrictions and covenants, and taxes levied in the year of closing. It does not warrant against public building, zoning or use restrictions. This is the best the buyer can get in terms of being protected by the seller.

Quitclaim deed
In a quitclaim deed, the seller does not guarantee ownership rights but instead merely conveys whatever title and rights that he or she has, if any. A quitclaim deed says in effect, “If I have any interest in the described land, I convey it.” As Wis. Stat. § 706.10(4) provides, in a quitclaim the seller does not warrant or imply the existence, quantity or quality of the interest conveyed. Generally, most buyers demand a warranty deed in all transactions. Along with the basic warranty and quitclaim deeds, the State Bar has created a series of specialty deeds.

Condominium deed
A condominium deed (State Bar of Wisconsin Form 8) is a warranty deed that contains additional preprinted language calling for the recording information for the condominium declaration and a reference to the condominium plat. The condominium deed also specifies that the provisions of the condominium law and the condominium documents, including the declaration, plat, bylaws, articles of incorporation, any rules or regulations, and any amendments thereto, are all exceptions to the warranty of title. This deed states that the buyer, by accepting the condominium deed, is agreeing that the buyer and the buyer’s “heirs, representatives, successors and assigns” will be bound by the provisions and conditions of the condominium documents and any amendments. The drawback with this deed is that the language for the exceptions to the warranty of title does not exactly match the language in the offer — something that many attorneys insist upon. If a warranty deed (State Bar of Wisconsin Form 1) is used instead of a condominium deed with a condominium legal description meeting the requirements of Wis. Stat. § 703.12 along with and proper verbiage making the condominium law and the condominium documents exceptions to title, there will be no significant difference. The statement binding the buyer and his or her successors to the condominium documents can be added if desired.

Personal representative’s, guardian’s and trustee’s deeds
Personal representative’s deeds, guardian’s deeds and trustee’s deeds are used by a personal representative, a guardian or a trustee, respectively, to convey property in settlement of a probate estate, a property held in guardianship or a property held in a testamentary or living trust.

These deeds are quitclaim deeds and do not contain any warranties of title. Generally, personal representatives and other fiduciaries such as trustees and guardians will convey with the corresponding specialty deed or quitclaim deed because they are not sufficiently familiar with the history of the property to give a warranty deed.

Special warranty deeds
The special warranty deed is contrasted with the general warranty deed. The special warranty deed guarantees only against title defects created by the grantor or seller. These deeds are not widely used in Wisconsin, primarily because the standard Wisconsin offer to purchase forms require conveyance by a warranty deed. 

The bottom line is that warranty deeds and condominium deeds include warranties of title, while other types of deeds do not.

Getting it right in the offer

The seller usually agrees in the offer to purchase to deliver a warranty deed to the buyer at closing. This will be the outcome if nothing in the Conveyance of Title section is modified and nothing else regarding title is written in. At times, this section may simply be overlooked.

Solving the problem starts with the listing agent. If the listing agent asks for a copy of the deed to the property or the owner’s title policy, requests the title company to run a search and hold, or takes some other action to find out how the title to the property officially is held, then the listing agent will know the status of the seller. If the seller is a guardian or a personal representative, for instance, the listing agent can check with them to see if they are willing to provide a warranty deed or whether they instead will give a guardian’s deed or a personal representative’s deed. Once that is established, the listing agent can share that information with cooperating agents and buyers before any offers are drafted. This information might be included, for example, in the MLS remarks or other marketing materials.

Cooperating agents may wish to confirm with the listing agent and then indicate in the offer if the seller is, for example, a trust or an estate. If this is the case, the language in the Conveyance of Title section says that a trustee’s deed or a personal representative’s deed, respectively, will be given at closing. This may be significant because from time to time there might be a title issue where a warranty deed would protect the buyer but a trustee’s deed or a personal representative’s deed would not — because they are quitclaim deeds. It may not hurt to also write in a statement in the Additional Provisions section or in an addendum that the seller is a trustee and will give a trustee’s deed to help guard against the parties and the agents from overlooking the preprinted language in the Conveyance of Title section.

Once the offer is drafted and submitted, the listing agent should confirm that the offer to purchase correctly identifies the intended type of conveyance before the offer is signed by the seller/client. If it does not, a counter-offer may be needed to correct the situation and avoid those closing day meltdowns that can occur when the wrong deed is used.

Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.