Is a Fee Simple Title As Good As a Warranty Deed?

The relationship between fee simple title and a Warranty Deed is not comparative. A Warranty Deed is a legal instrument in which the party granting the deed more or less guarantees that he will give the transferee fee simple title. Fee simple is a type of estate that entails full ownership of the property. Those with specific questions about deeds and real estate transfers should seek legal advice.

Fee simple, also known as fee simple absolute, is a type of legal possession in which the fee simple holder has complete possessory rights to the property. The holder can sell the property, leave the property via will or inheritance, or (depending on circumstances) may even destroy the property. Fee simple ownership has the potential to continue for an unlimited duration. U.S. law currently treats fee simple as the default estate in real estate transfers, unless the transferring instrument stipulates some other type of ownership.

There are several other estates, known as "defeasible fees," that don't entail complete ownership. These are fee simple determinable, fee simple subject to condition subsequent, and fee simple subject to executory interest. All of these estates impose legal restrictions on the holder's ownership, and buyers should not confuse them with the true fee simple described in Section 1.

Deeds are not a type of ownership. A deed is the legal document that proves a real estate transfer and specifies what type of ownership the transferor is giving to the transferee. One party transfers the deed to the other, then the recipient typically records the deed. For instance, in a fee simple transfer, the deed will stipulate that the title being transferred is fee simple.

A Warranty Deed, also known as a General Warranty Deed in some jurisdictions, differs from other types of deeds by explicitly guaranteeing that the party handing over the deed has fee simple title with no limitations (unless such limitations have been disclosed to, and accepted by, the new owner). Liens, prior transfers to another party, easements, mortgages and other legal arrangements that grant a third party some sort of ownership or usage rights in the property would all constitute an impairment on the granting party's title.

Once one party transfers a Warranty Deed to another, any breach of the deed's promises provides legal grounds for the new owner to sue. For instance, Dave sells his property to Andrew and uses a Warranty Deed. One year later, Mark shows up with a deed showing that Dave had already transferred the property to Mark before selling to Andrew. Because Dave used a Warranty Deed to sell to Andrew, Andrew can now sue Dave. In most jurisdictions, if Andrew wins, Dave will have to pay Andrew the monetary value of the gap between the good title guaranteed to Andrew by the Warranty Deed, and the actual, impaired title that Andrew received.