What does Quit Claim Deed mean?

Question

I did three buy and hold deals in the last three months and thinking of doing my first flip. There's a house on the MLS that I'm currently interested in, but I didn't know what "Buyer to take title by Quit Claim Deed" exactly mean. Is that gonna effect the ARV? Is it gonna be hard to resale?

Thanks in advance!

Account Closed · Answer

Most insurance companies will not write a  title insurance on a quit claim.

Joe Gore

David Mitchell · Answer

Here's a short youtube video on the pros and cons of using a QCD:  https://www.youtube.com/watch?v=J5QAsSmBkLE

Shawn Duncan · Answer

Very risky indeed,  You may end up with vegetation liens, sewer liens or mechanics liens from unpaid contractors.  All depending on your states laws of course. Bottom line a very risky way to purchase a property.

David J. · Answer

A "quit claim" is a type of deed that gives you the grantor's interest in the property.  Nothing more, nothing less.  These are very risky and provide the buyer with 0% warranty of clear title.  There is a reason soemone want to quit claim the property to you and you need to know exactly what the reason is before you accept it.  Close at a title company and buy title insurance to proptect yourself.

Richard Ball · Answer

a quit claim deed is a way of transferring title without going through a title search or all the associated closing costs. it would be in your best interest to do your due diligent on this property as well as get a title search as there could be liens.

http://en.wikipedia.org/wiki/Quitclaim_deed

Ali Tayeh · Answer

Thank you very much guys for the great information! You saved me a lot of time, money and resources. Best Regards!

-Ali

Ned Carey · Answer

@David Jackson  Gave the best answer so far and the video above is very good.

There is a lot of misunderstanding of quit claim deeds. A quit claim deed basically says If I have any interest in the property I grant that interest to you. No warranty is given that I even have any interest.

Not true, any type of deed can be transferred without a proper closing and title search. On the other hand even when a quit claim deed is used there can be a traditional settlement, title search and title insurance. Whether you can get title insurance will depend on the title company and specific facts of the transaction.

Possibly true but not necessarily so. This will depend on your contract more so than state law. Most contracts will say something like "the property shall be sold free and clear of all liens and encumbrances" This means it is the sellers responsibility to pay back liens. Presuming you do a traditional full settlement the title company will take care of that. You need to read and understand your contract.

If you take a quit claim deed with a traditional settlement and get title insurance your risk is modest. If you take a quit claim deed without a full settlement and title insurance your risk is substantial.

Bottom line a quit claim deed is a red flag it is not necessarily a deal breaker.

What does Quit Claim Deed mean?

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