There are three types of trust deeds commonly used in the United States: the general warranty trust deed, the special warranty trust deed and the quitclaim trust deed. The general and special warranty trust deeds contain the same six covenants. Whereas the general warranty trust deed covers title defects from any previous seller, the special warranty trust deed only covers defects caused by the current seller. The quitclaim trust deed contains no covenants. Potential buyers of a special warranty trust deed should be aware of these six covenants.
Covenant of Seisin
The covenant of seisin warrants that the grantor actually owns the property. This covenant applies to the type of estate being conveyed, such as a fee simple or a life estate, as well as the quantity of the land, such as a specified acreage. This covenant is considered a present covenant, meaning that if it is breached, it is breached at the time the land is conveyed.
Covenant of Right to Convey
Unlike the covenant of seisin, which warrants that the seller owns the property, the covenant of the right to convey means that the seller has the legal right to transfer title to the property. For example, suppose that the seller owns the property with two other people. The seller conveys the property to the buyer. Assuming that the seller did not have the authority of the other two owners to sell the property, the seller has violated the covenant of the right to convey. As with the covenant of seisin, this covenant is a present covenant, meaning that it is breached at the time of conveyance.
Covenant Against Encumbrances
The covenant against encumbrances warrants that there are no easements, covenants, mortgages or liens on the property “except as enumerated herein.” For example, the seller owns property over which a hidden underground water pipe exists. Because the water pipe constitutes an easement, if the seller does not disclose the existence of the easement to the buyer before the sale, the seller has breached the covenant against encumbrances. As with the covenant of seisin and the covenant of the right to convey, this covenant is also breached at the time of conveyance.
Covenant of Quiet Enjoyment
Although the covenant of quiet enjoyment is usually thought of in the context of landlord and tenant matters, it is also included in a special warranty deed. This covenant provides that the buyer will not be disturbed in the buyer’s possession of the property by the lawful claim of a third party. For example, suppose the owner rented a portion of the property to the tenant. Without telling the buyer of the tenancy, the owner sells the property to the buyer. If the lease to the tenant survives the sale and the tenant demands possession of the rented portion of the property from the buyer, the owner has breached the covenant of quiet enjoyment. This covenant is considered a future covenant, rather than a present covenant as with the previous covenants. This means that the covenant can only be breached after the property is conveyed. In this example, the covenant was only breached once the tenant demanded possession of the rented premises after the sale.
Covenant of Warranty
The covenant of warranty is very similar to the covenant of quiet enjoyment. Whereas the covenant of quiet enjoyment provides that the buyer will not be disturbed in the buyer’s possession of the property, the covenant of warranty provides that the title to the property is good and that, as grantor, he will defend at his own cost any suit from a party claiming paramount title. As with the covenant of quiet enjoyment, this covenant is a future covenant.
Covenant of Further Assurances
The covenant of further assurances is like a catch-all covenant. It provides that the seller promises to perform whatever acts are necessary to perfect the buyer’s title to the property, such as executing any necessary additional documents and taking all other reasonable measures. As with the covenants of quiet enjoyment and warranty, this covenant is a future covenant.