In contracts, leases, loan documents and other agreements, we frequently see a request that one party indemnify the other against certain occurrences.
As a simple and general proposition, indemnity provisions are ill-advised for the indemnitor.  They are open-ended access to one’s checkbook for all sorts of claims, and are usually accompanied by a duty to defend against those claims (i.e., pay for an attorney to defend a suit), whether meritorious or frivolous.  Thus, a short indemnity paragraph could lead to hundreds of thousands or millions of dollars of unexpected and unintended liability.  As a rule: Not a good idea.
Taking this concept over into the world of real estate sales, as is explained in this blog entry, Real Estate 101: Types of Deeds in Ohio, when a seller executes and delivers a warranty deed in Ohio (General Warranty Deed or Limited Warranty Deed), he is essentially providing an open-ended indemnification to a buyer of that property — and his successors down the chain of title — against certain title claims.  Among other things, a warranty covenant is a promise to defend against certain claims to the title from a third party.
Ohio Courts have ruled that the failure to provide that defense will mean the grantor must pay the attorneys fees of the grantee to so defend the title. Â Hollon v. Abner, 1997 WL 602968 (Ohio App. 1 Dist., 1997).
Thus, although it is “standard operating procedure” in real estate transactions to provide a warranty deed, sellers may want to re-think that (starting with the signing of the contract as that instrument dictates what form of deed is required at the closing) and understand their open-ended exposure from a warranty deed.
