Breach of Warranty
Definition and meaning of Breach of Warranty in real estate.
A breach of warranty is a legal failure that occurs when a seller fails to deliver clear, unencumbered title to a buyer as promised in a warranty deed. This can happen if undiscovered liens, easements, or ownership claims emerge after the transaction is complete.
In more detail
When a seller signs a general warranty deed, they warrant that they own the property and that the title is free from hidden defects. If a third party later proves they have a valid claim or lien against the property, the seller has breached this warranty.
The buyer can sue the seller for damages to cover the cost of resolving the title issue. Title insurance is typically purchased during the closing process to protect buyers and lenders against the financial risks of a breach of warranty.
Key facts
| Category | Legal, Titles & Closing |
|---|---|
| Trigger | Discovery of undisclosed liens, ownership claims, or title defects |
| Primary defense | Title insurance policies purchased at closing |
| Deed type | Typically associated with general or special warranty deeds |
A buyer purchases a home with a general warranty deed but later discovers an unpaid tax lien from the previous owner, resulting in a breach of warranty by the seller.
Frequently asked questions
How does title insurance protect against a breach of warranty?
Title insurance pays to defend the buyer's ownership rights in court and covers the financial losses up to the policy limit if a title defect is found.
What is the difference between a warranty deed and a quitclaim deed?
A warranty deed guarantees that the seller has clear title, whereas a quitclaim deed transfers ownership with no guarantees or warranties of title.
Related terms
Sources & references
See our sources and editorial standards.