Implied warranty means that a grantor owns a marketable title that can be freely transferred. Furthermore, the property has not been sold or transferred to anyone else, and will remain in the grantor’s possession until the transfer of the deed.
A grant deed may exclude certain title guarantees, however, such as the protection of an easement. To protect the interests of all parties involved – particularly the grantee – title insurance should be purchased.
A standard policy of title insurance is a title policy that protects consumers from defects in title in matters relating to public records, forgery, tax liens, corporation deeds, and non delivery. In the event that a grantor violates any of the deed’s implied covenants, a grantee may have the right to recover damages.
Most property deeds – including a grant deed – contain title covenants that ensure a marketable title and implied warranty between the grantor and grantee.
Most property deeds – including a grant deed – contain title covenants that ensure a marketable title and implied warranty between the grantor and grantee.
Implied Warranties Have Marketable Title
A marketable title is a clean title that allows a buyer to have full interest in a purchased property. This means that a property is free and clear of any interests (i.e. encumbrances, involuntary liens) that would “cloud” the title and affect the ownership rights of a grantee.
All property taxes must be paid off prior to the sale, or must be disclosed to the buyer as a part of the transaction.
Implied warranty means that a grantor owns a marketable title that can be freely transferred. Furthermore, the property has not been sold or transferred to anyone else, and will remain in the grantor’s possession until the transfer of the deed.
Warranty Deed and Implied Warranties
A warranty deed transfers the real property interests of one party to another and includes a marketable title and implied warranty.
Warranty deeds offer a high level of protection for grantees. It should not be used as a substitute for purchasing title insurance, however. (Only title insurance can guarantee the prevention of loss due to undisclosed liens.) The overwhelming majority of real estate purchases in California do not utilize warranty deeds as buyers typically purchase title insurance.
A marketable title is a clean title that allows a buyer to have full interest in a purchased property. This means that a property is free and clear of any interests (i.e. encumbrances, involuntary liens) that would “cloud” the title and affect the ownership rights of a grantee.
Various Types of Deeds and Whether They Have an Implied Warranty
A warranty deed transfers the real property interests of one party to another and includes a marketable title and implied warranty.
A quitclaim deed is similar to a grant and warranty deed in that it transfers the interests in a real property from one party to another; however, it does not ensure a marketable title or implied warranty. Without a marketable title or implied warranty, a grantee receives all of the interests held by a grantor at the time a quitclaim deed is executed. It also does not afford a grantee any legal recourse to sue for damages. This leaves room for potential title disputes to occur.
Once a landlord repairs the breach in the implied warranty of habitability, he or she can return to charging the original rent in the lease.
In a situation where an unlawful detainer of residential real estate occurs by the landlord, the landlord will be liable for all costs to the tenants, including attorney fees and potential damages.
A tenant is not protected when a property’s habitability is affected by the tenant’s actions.
Case Law As It Relates to Implied Warranty Deed
Case Review: Hyatt v. Tedesco (2002)
The case, Hyatt v. Tedesco (2002) 96 Cal.4th.Supp. 62., involved a dispute regarding a breach of implied warranty of habitability.
A tenant (Tedesco) lived in a building owned by a landlord (Hyatt). Tedesco’s apartment was not properly waterproofed and the roof had severe leaking. Consequently, Tedesco stopped paying rent. Tedesco countersued on the basis that the property was not habitable.
The Superior Court determined that the defects in Tedesco’s apartment were not substantial. Therefore, Hyatt should only be required to reduce the rent for one month and retain full possession. Tedesco appealed. The Court of Appeals argued that the property had not only cosmetic defects, but also issues that affected Tedesco’s health and safety. It ruled that such evidence proved a substantial breach of implied warranty of habitability. The court ordered Hyatt to reduce Tedesco’s rent until the necessary repairs were made.
