A Tennessee bank acquired a residential property through non-judicial foreclosure and is now selling it to an investor. The bank's attorney prepares a deed that warrants title only against claims arising from the bank's own actions during its period of ownership, but not against any prior claims. Which type of deed is the bank using?
Correct Answer
D) Special warranty deed
A special warranty deed contains a limited warranty under which the grantor warrants title only against defects or encumbrances created during the grantor's own period of ownership. Banks and institutional sellers commonly use special warranty deeds in Tennessee because they cannot reasonably warrant against title issues that may have existed before they acquired the property through foreclosure.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Community property is a system where property acquired during a marriage is owned equally by both spouses.
A freehold estate represents ownership of real property with an indefinite duration.
Joint tenancy is a form of co-ownership in which two or more persons hold equal, undivided interests in property with the right of survivorship. When one joint tenant dies, their interest automatically passes to the surviving joint tenants.
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