Loan Officer Practice Exam

What type of deed guarantees a clear title and the right of the grantor to convey?

1. Warranty deed

2. Conveyance deed

3. Real property deed

4. Grantor's deed

The correct answer is: Warranty deed

A warranty deed is designed to provide the highest level of protection to the grantee, as it guarantees a clear title to the property being conveyed. This type of deed assures that the grantor has the legal right to transfer ownership and that the title is free of any liens or encumbrances except those specifically stated in the deed. In a warranty deed, the grantor not only conveys the property but also promises that they will defend the title against any claims that may arise. This protection extends to the full duration of the ownership, offering both assurance and security to the buyer. Such a guarantee is critical in real estate transactions, as it allows a buyer to have confidence in their investment. Other types of deeds, such as a conveyance deed or a grantor's deed, do not offer the same level of warranty regarding the title. They may convey property but might not include the same extensive protections concerning the title’s clarity and the grantor's rights. A real property deed is a more general term that encompasses various types of deeds and may not specifically imply the same guarantees as a warranty deed.