PSI New Jersey Real Estate State Practice Exam

Which of the following is a characteristic of warranty deeds?

1. They provide limited protection to grantees

2. They ensure clear title and protection against future claims

3. They are the same as quitclaim deeds

4. They require special filings with the state

The correct answer is: They ensure clear title and protection against future claims

Warranty deeds are a specific type of deed that provides a high level of protection for the grantee, which is the person receiving the property. The key characteristic of a warranty deed is its guarantee that the grantor, or seller, holds clear title to the property and has the legal right to transfer ownership. This type of deed promises that the property is free from any encumbrances or claims, except those that are explicitly stated in the deed itself. Additionally, warranty deeds protect the grantee against any future claims that may arise regarding the title to the property. If a claim is made against the property that arose prior to the grantee's acquisition, the grantor is typically responsible for resolving the issue and compensating the grantee for any loss. This essential benefit of warranty deeds makes them a preferred choice for buyers who want assurance and legal recourse in case any disputes over the title occur after the sale. The other choices reflect misunderstandings about warranty deeds. Limited protection is more characteristic of other deed types, such as quitclaims. Warranty deeds are not the same as quitclaim deeds; quitclaim deeds transfer any interest the grantor has but do not offer guarantees regarding title. Finally, warranty deeds do not require special filings beyond standard property transfer requirements