Short version: the deed is how ownership moves, and the type of deed determines how much the seller promises about the title they are handing you. A general warranty deed promises the most. A quitclaim promises nothing at all. On a financed investment purchase your lender will usually insist on one of the two warranty forms, and when a quitclaim shows up in the chain, underwriting slows down.
Most investors never look at the deed. It gets recorded, the title policy arrives eight weeks later, and the property is theirs. That works fine until the purchase is from an estate, from a wholesaler, from a family member, or out of a tax sale, and suddenly the form of the deed is the whole conversation.
The deed is not the mortgage
Start here, because the confusion is common. The deed conveys ownership from seller to buyer. The mortgage or deed of trust is a lien you grant to the lender against the property you now own. They are different documents, signed by different parties, doing different jobs. If that distinction is fuzzy, the note and the mortgage are also two separate instruments, and the same clarity applies.
Both get recorded, usually in the same batch, and the order matters for lien priority. That part happens after funding, and whether your money moves at the table or a day later depends on your state.
General warranty deed
This is the strongest form and the default on most arm’s length residential and small investment purchases. The seller warrants title against every defect, going all the way back through the chain of ownership, whether or not the seller had anything to do with the defect.
Practically, the seller is making these promises:
- They own the property and have the right to convey it.
- Nobody else has a superior claim.
- There are no encumbrances beyond the ones disclosed.
- If someone shows up later with a valid claim from 1974, the seller will defend the title or make you whole.
That last one is the point. The warranty is not limited to the seller’s own period of ownership. It reaches backward indefinitely. This is why an individual seller’s attorney will sometimes resist giving one, and why institutional sellers almost never do.
Special warranty deed
Also called a limited warranty deed in some states. The seller warrants title only against defects that arose during their own ownership. Anything before that is not their problem.
This is the standard form from banks selling foreclosed property, from relocation companies, from receivers, from most institutional sellers, and from a lot of experienced flippers who owned the property for four months and reasonably decline to warrant sixty years of history they never touched.
A special warranty deed is not a red flag. Your lender will accept one on almost any file. The reason it is acceptable is that your protection against older defects comes from the title insurance policy rather than from the seller’s promise, and the title company underwrote the chain before it agreed to insure.
Where it matters is negotiation. If your seller is offering a special warranty deed, you are relying entirely on the title work. That is a reason to read the commitment carefully rather than a reason to walk.
Quitclaim deed
A quitclaim conveys whatever interest the grantor happens to have, if any, with no promise whatsoever that they have any. If the grantor owns nothing, you receive nothing, and you have no claim against them.
Quitclaims have legitimate uses, and investors run into most of them:
- Moving a property you already own into an entity. This is the single most common investor use. Deeding a rental into your own LLC has real consequences for the existing loan and for title, and a quitclaim is usually the instrument used.
- Clearing a spouse, a former partner, or an heir off title. Cheap, fast, and appropriate when the parties already agree.
- Curing a defect. A missing heir signs a quitclaim to confirm they are not claiming an interest.
Where a quitclaim becomes a financing problem is when it is the deed conveying the property to you in an arm’s length purchase, or when it appears one or two links back in the chain. Title underwriters treat a recent quitclaim as an open question, because a quitclaim is also exactly what a fraudulent transfer looks like on paper.
Expect one or more of the following when a quitclaim sits in the recent chain: an extended underwriting review, a requirement for additional owner affidavits, an exception carved out of the title policy, or a seasoning requirement before a lender will finance. That last one connects directly to how long you owned the property and what you paid for it, which is the first thing your buyer’s lender will look at when you go to sell.
The forms you see less often
- Bargain and sale deed. Conveys with an implied claim of ownership but no warranty. Common on judicial and municipal sales in some states.
- Sheriff’s deed or tax deed. Issued out of a foreclosure or tax sale. The title risk is real and time-bound. Redemption periods are the reason lenders wait on tax sale acquisitions.
- Deed in lieu of foreclosure. An owner conveys to the lender to avoid foreclosure. Shows up in chains and raises the same review questions as a quitclaim.
- Trustee’s or personal representative’s deed. From a trust or an estate. Fine, but the authority of the signer becomes the review item.
What the seller swears to separately
The deed is not the only place the seller makes promises. At closing the seller also signs an affidavit covering unrecorded liens, work performed on the property, parties in possession, and similar items. That affidavit is what your lender and the title company actually rely on for the gap between the last title search and recording.
And your own signature stack includes a compliance agreement that lets the lender have you re-sign a corrected document later, which is exactly the safety valve that gets used when a legal description on a deed turns out to be wrong.
Does the deed type change your loan?
Directly, no. The deed type does not change your rate, your loan to value, or your ratio. Indirectly, it can change whether you close on time and whether the title policy carries exceptions that a future buyer’s lender will object to.
Here is the arithmetic that does not move. A single family rental at 220,000 dollars with 25 percent down gives a loan of 165,000 dollars. At 7.375 percent over 30 years, principal and interest are 1,139.61 dollars. Taxes are 295 dollars a month, insurance is 130 dollars, so the monthly obligation is 1,564.61 dollars. Market rent is 1,975 dollars.
| Line | Monthly |
|---|---|
| Principal and interest on 165,000 dollars at 7.375 percent | 1,139.61 dollars |
| Property taxes | 295.00 dollars |
| Insurance | 130.00 dollars |
| Total obligation | 1,564.61 dollars |
| Gross market rent | 1,975.00 dollars |
| DSCR | 1.26 |
That 1.26 is 1,975 divided by 1,564.61, and it is identical whether the seller hands you a general warranty deed or a special warranty deed. If you want to see how the inputs move the ratio, the underlying calculation is worth walking through once, then run your numbers in the DSCR deal calculator.
Where the deed does cost you money is time. An extended title review on a quitclaim in the chain can add a week. On that same file, a week of delay at 7.375 percent on 165,000 dollars is about 233 dollars of carry if you are already holding, plus whatever the rent slip costs.
What to do with this before your next closing
- Read the purchase agreement for the deed type. It is usually named in one line. If it says quitclaim on an arm’s length purchase, ask why.
- Get the title commitment early and read the exceptions. The exceptions are the part that follows you.
- If there is a quitclaim within the last two years, flag it to your lender at application. Not at the table. A quitclaim discovered on day eighteen is a delay. Disclosed on day one, it is a task.
- When you deed into your own entity, understand what you are giving up. A quitclaim to your own LLC is normal, and it still has consequences for the loan already on the property.
- Keep your deeds. When you refinance in three years, the chain is what underwriting reads.
The deed is one page of a hundred page package and it is the page that says whether you own the property. It is worth thirty seconds of attention.
Where we sit
FMC Capital is a Pittsburgh-based mortgage brokerage that works with real estate investors. We place rental and renovation loans on investment property for investors throughout Pennsylvania and additional states, and we have underwritten plenty of files with a quitclaim sitting two links back in the chain. If you have an acquisition where the deed or the chain looks unusual, send it over or call 412-990-2941 before you set a closing date.
This is general information, not legal advice. Deed forms and their effects vary by state, and you should have a real estate attorney review any conveyance you are unsure about. Terms and program parameters described here are illustrative and subject to change. FMC Capital, NMLS #1840537.