Escrow & Title
In Colorado, a 'special warranty deed' warranties title against:
AA. All defects in title from any source, including prior owners
BB. Only defects that arose during the current grantor's period of ownership✓ Correct
CC. No title defects whatsoever
DD. Only defects created by the buyer
Explanation
A special warranty deed (also called a limited warranty deed) warrants title only against defects that arose during the current grantor's ownership — not against claims arising from prior owners. This is commonly used by developers, lenders in foreclosure, and commercial sellers.
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Key Terms to Know
Deed
A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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