A bank that acquired a property through foreclosure in Hennepin County, Minnesota is now selling that property to a buyer. The bank has no knowledge of the property's history prior to foreclosure. Which type of deed would the bank most likely use to convey this property while limiting its warranty obligations?
Correct Answer
A) Special warranty deed, because the bank warrants only against defects arising during its ownership
A special warranty deed is the appropriate instrument for a bank or lender selling a foreclosed property in Minnesota. The bank can only warrant title against defects that arose during its own period of ownership — it cannot reasonably warrant against title defects that existed before foreclosure. Using a special warranty deed limits the grantor's liability to the period of their ownership while still providing some warranty protection to the buyer.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Condominium ownership involves owning a unit of airspace within a multi-unit building plus an undivided interest in the common elements shared with other unit owners. Each unit is separately taxed and financed.
In a cooperative (co-op), the building is owned by a corporation, and residents purchase shares of stock in the corporation that entitle them to a proprietary lease on a specific unit. Residents are shareholders, not property owners.
Fee simple absolute is the highest and most complete form of property ownership, giving the owner unrestricted rights to use, possess, enjoy, and dispose of the property. It is of unlimited duration and fully inheritable.
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