A Michigan warranty deed is a written instrument that transfers ownership of real property and binds the seller (the grantor) to defend the buyer’s (the grantee’s) title against any competing claim. Under MCL 565.151, the statutory warranty language conveys the property in fee simple and creates five covenants of title that run with the deed.1Michigan Legislature. Michigan Compiled Laws 565.151 – Form; Warranty Deed That guarantee is what distinguishes it from a quitclaim deed, which transfers whatever interest the grantor happens to hold and promises nothing about its quality. If you are buying, selling, or gifting Michigan real estate, the deed you sign controls what protection travels with the title, what taxes you owe at recording, and what your annual property tax bill looks like the year after closing.
What a Warranty Deed Guarantees
The statutory warranty language in MCL 565.151 obligates the grantor on five covenants that cover the entire history of the property, not just their own period of ownership:1Michigan Legislature. Michigan Compiled Laws 565.151 – Form; Warranty Deed
- Seisin, meaning the grantor actually owns the property.
- Right to convey, meaning no legal barrier prevents the sale.
- Quiet enjoyment, meaning no one with a superior claim will disturb the grantee’s possession.
- Freedom from encumbrances, meaning no undisclosed liens or easements exist.
- Warranty of title, meaning the grantor will defend the title against later claims.
If any of these turn out to be false, the grantee can sue the grantor for damages. That is the general warranty deed, and it is the standard instrument in most Michigan residential sales because it puts the most risk on the seller. Lenders prefer it for exactly that reason.
A special warranty deed narrows the promise. The grantor warrants only that they personally did nothing to create a title defect while they owned the property. Problems from earlier in the chain of title are not their problem. Special warranty deeds show up more often in commercial deals, bank-owned property sales, and transfers by executors or trustees, where the seller has limited knowledge of what happened before they took title. If you receive a special warranty deed, the gap between what the deed covers and what could actually go wrong is wider, and title insurance carries more of the load.
What Makes a Warranty Deed Valid in Michigan
Michigan’s Statute of Frauds requires every conveyance of land to be in writing and signed by the party making the transfer.2Michigan Legislature. Michigan Compiled Laws 566.108 – Statute of Frauds; Contract for Interest in Lands Beyond that, several elements have to line up for the deed to hold at recording and in any later dispute.
The deed must clearly name the grantor and the grantee. It must contain a precise legal description of the property, typically by lot number and subdivision or by metes and bounds. A street address alone is not enough and is a recurring source of boundary disputes. The deed must state the consideration exchanged and use words showing the grantor’s intent to convey ownership.
The grantor’s signature must be acknowledged before a notary public. The notary confirms that the signer personally appeared and was positively identified, either through personal knowledge or satisfactory evidence.3Michigan Secretary of State. Acknowledgements The notary does not verify the contents of the deed or confirm that the signer is acting voluntarily; the role is limited to identity and appearance.
Michigan also imposes formatting rules for any instrument submitted for recording. The deed must be printed in at least 10-point type on white paper between 8.5 by 11 and 8.5 by 14 inches, with a 2.5-inch margin at the top of the first page. The grantor’s printed name must appear beneath the signature, and the notary’s printed commission name must appear beneath the notary’s signature with no discrepancy between the printed and acknowledged names.4Michigan Legislature. Michigan Compiled Laws 565.201 – Instrument Conveying or Encumbering Title to or Interest in Real Estate A register of deeds can reject a deed that does not comply.
Finally, the deed must be delivered to the grantee. Delivery can be physical or constructive, meaning the grantor’s actions clearly show intent to transfer ownership. Until delivery, the grantee has no legal title regardless of what the paper says.
Recording the Deed
Recording is not technically required for a deed to be valid between the grantor and grantee, but skipping it creates serious risk. Under Michigan law, an unrecorded deed is void against a later buyer who purchases the same property in good faith, pays value, and records first.5Michigan Legislature. Michigan Compiled Laws 565.29 – Unrecorded Conveyance; Validity Against Subsequent Purchaser If you buy property and do not record, the seller could in theory convey the same property to someone else, and if that second buyer records first, they win.
To record, submit the original notarized deed to the register of deeds in the county where the property sits. Recording fees are typically a flat $30, though this can vary by county. The register also collects state and county transfer taxes at recording.
Record as soon as possible after closing. Every day between delivery and recording is a window where a competing claim, a judgment lien against the grantor, or a grantor bankruptcy filing could complicate your ownership.
Michigan Transfer Taxes at Recording
Michigan imposes two transfer taxes when a deed is recorded. Both are calculated on the property’s sale price or fair market value:
- State transfer tax: $3.75 for every $500 of value, or any fraction of $500.
- County transfer tax: $0.55 for every $500 of value, or any fraction of $500.
On a $300,000 home, the combined transfer tax comes to roughly $2,580. Both taxes are due at recording if the property’s value is $100 or more. Who actually pays is a matter of the purchase agreement, though the common Michigan practice puts the state tax on the seller and the county tax on the buyer.
Several transfers are exempt. Conveyances from a parent to a child, including stepchildren and adopted children; transfers from a parent to a grandchild; transfers between spouses that create or dissolve a tenancy by the entireties; and transfers where the consideration is less than $100 all qualify.6Michigan Legislature. Michigan Compiled Laws 207.526 – Exempt Instruments and Transfers Transfers between a business entity and its owners during dissolution are exempt, as are reorganizations that do not change beneficial ownership. If your transfer fits an exemption, claim it at recording. Missing one is money left on the table.
Property Tax Uncapping After the Transfer
This is the cost that catches most Michigan buyers off guard. Under Proposal A of 1994, a property’s taxable value can rise each year by no more than the rate of inflation or 5%, whichever is less. Over years of ownership, the taxable value often drifts well below the state equalized value (SEV), which is roughly half the property’s market value. When the property changes hands, that cap comes off.
In the calendar year after a transfer of ownership, the taxable value resets to the SEV.7Michigan Legislature. Michigan Compiled Laws 211.27a – Transfer of Ownership For a home held by the same owner for 15 or 20 years, the jump can be sharp. A property with a taxable value of $80,000 might uncap to an SEV of $150,000, nearly doubling the annual tax bill.8State of Michigan. Changes in Ownership and Uncapping of Property
Not every transfer triggers uncapping. Some family transfers, including certain parent-to-child conveyances, are excluded from the transfer-of-ownership definition for property tax purposes, though that list is not identical to the transfer tax exemption list. Before closing, compare the property’s current taxable value to its SEV. The difference is the size of the increase you will absorb the following year.
When the Deed Transfers Property as a Gift
Warranty deeds are also used outside of arm’s-length sales, most commonly to move property within a family. The federal tax picture shifts when the deed is a gift.
When property is transferred by warranty deed for less than fair market value, the IRS treats the difference as a gift. For 2026, the annual gift tax exclusion is $19,000 per recipient.9Internal Revenue Service. Frequently Asked Questions on Gift Taxes If the property’s value exceeds that, the donor must file IRS Form 709. Married couples can elect gift splitting and exclude up to $38,000 combined. Filing the return does not necessarily mean owing gift tax, because the excess applies against the lifetime exemption, but the reporting obligation is mandatory.
Gifted property also carries a hidden tax cost. The recipient generally takes the donor’s original cost basis rather than a stepped-up basis equal to current market value. A later sale calculates the taxable gain from what the donor originally paid, not what the property was worth when the gift changed hands.10Office of the Law Revision Counsel. 26 USC 1015 – Basis of Property Acquired by Gifts and Transfers in Trust If fair market value at the time of the gift was lower than the donor’s basis, the rules split: fair market value applies for calculating a loss, the donor’s basis for calculating a gain. This carryover-basis rule is one of the most overlooked tax traps in family property transfers, and it often makes a transfer at death (which does get a stepped-up basis) more tax-efficient than a lifetime gift.
Title Insurance and the Deed’s Covenants
Warranty deed covenants and title insurance overlap but do different jobs. The covenants give you a personal claim against the grantor. If the grantor has no assets or cannot be located years later, that claim is worth little in practice. Title insurance is backed by the insurer and pays out regardless of the grantor’s financial condition.
Title insurance also covers risks the deed’s covenants do not, including forged documents in the chain of title and recording errors the grantor could not have known about. A standard owner’s title policy, however, is not transferable. When you sell, your buyer does not inherit it. Your policy continues to protect you only for the exposure you still carry, which, if you conveyed with a general warranty deed, includes claims arising from those covenants.
Buyers taking a special warranty deed or a quitclaim deed should treat title insurance as essential rather than optional, because the deed itself offers limited or no recourse for pre-existing defects.
Common Problems That Cloud a Warranty Deed
Even with the protections baked into a warranty deed, problems surface regularly.
The most frequent is an undisclosed lien or encumbrance appearing after closing. A federal tax lien against the grantor is a direct breach of the covenant against encumbrances, because the lien attaches to all of the grantor’s property and follows it through the sale unless properly released. Standard title practice is to pay off any lien at closing from the seller’s proceeds, with the title company holding funds in escrow until the release is issued. The IRS is required to release a federal tax lien within 30 days of full payment.11Internal Revenue Service. Instructions for Requesting a Certificate of Release of Federal Tax Lien Judgment liens and last-minute mechanic’s liens can also slip through even a thorough title search.
Errors in the legal description are the second big category. A transposed lot number or an outdated metes-and-bounds description that no longer matches a recent survey can leave the deed technically describing the wrong parcel. Michigan courts can reform a defective deed in an equitable action when clear evidence shows the parties intended to convey a specific property and a scrivener’s error caused the mismatch, provided the fix does not harm a third party who relied on the recorded description in good faith.
Misidentifying the parties creates similar problems. A misspelled grantor name or an incorrectly named trust may not effectively pass title from the actual owner, forcing a corrective deed or a quiet title action, both of which add cost and delay.
One less obvious risk is timing. If the grantor files for bankruptcy after signing the deed but before the grantee records it, the automatic stay can freeze the transfer, and a deed delivered in violation of the stay may be voided. Prompt recording is the simplest protection. For any transaction with a complicated title history, an odd party structure, or family tax planning wrapped around it, having an attorney review the deed before signing is the cheapest insurance available.