We have found a home on an Austin area lake that we really like. It has recently been acquired via a court mandated asset seizure. Apparently the owner of the house had some debt he couldn't repay so a court seized this house and will sell it and give the proceeds to whomever the owner owed. It was a second home and therefore not his homestead. The court has appointed a realtor to sell the property and the realtor showed us the house last week.

When showing us the house, she said that a Special Warranty Deed would come with the home instead of a General Warranty Deed. My understanding is that the Special Warranty Deed only warranties the deed from the time that the court acquired the home and so if there is a lean or if the owner sold some interest of the home to somebody prior to the court seizing the property, that person could still have a claim on the ownership.

If the above is true, is this something that the title company can address? I would think that the title company and a good real estate attorney could do the research required to determine whether there were any claims (leins, partial ownership, etc.) on the property. If they can provide a reasonable assurance that there are no claims on the property and I proceeded with purchase and received the Special Warranty Deed, would I ever be able to offer whomever buys the house from me a General Warranty Deed? I would not want to be in a situation whereby I have difficulty selling the property if I am only ever able to provide a future buyer a Special Warranty Deed myself.

I am going to engage with an attorney before I make an offer, but any free advise on here before I do that would be most appreciated.

Definitely get title insurance.

Recent Texas Supreme Court case affirmed an appellate courts decision calling into question the effect of a Special Warranty Deed. The concerns created by that particular case can be addressed by having language added to the Special Warranty Deed with the grantor warranting they actually have title to convey.

Make sure your title insurer is still okay accepting special warranty deeds in light of the Cochran case (title insurers were widely accepting them previously, but Chicago got burned in Cochran, so insurers may be more leery)

See this article

https://www.jdsupra.com/legalnews/texas-supreme-court-opinion-has-buyers-25692/

And there would be nothing preventing you from later conveying with a General Warranty Deed but you would basically be assuming liability for title issues that arose outside of your ownership, and you would have limited ability to go back to your seller on their warranty of title.

Thank you for the thorough response. I am still trying to get this deal done and think there is a good chance we will get it done.