A special warranty deed is a type of deed that transfers ownership of real estate where the grantor guarantees that the grantor is the lawful owner, can sell/transfer the property, and there are no title defects during the grantor’s ownership. A special warranty deed would not cover any issues that existed before the grantor acquired the property. The grantor is basically saying for the time I owned the property, title is clear, but any time before I owned the property, title is transferring AS IS.
Grantors use a special warranty deed because they do not want to provide a full warranty of the property’s condition. Perhaps they have only held title for a very short time and they do not want to assume responsibility for defects prior to their ownership.
A special warranty deed is commonly used in commercial real estate transactions or when a property has been foreclosed and the bank owns the property, holds title for a short period, and transfers it to a new buyer.