Does anyone ever buy with a QUIT CLAIM Deed
Professional · San Diego, CA · Member since 2015 · 58 posts · 6 votes
Does anyone ever buy with a QUIT CLAIM Deed
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Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
9yIt would depend on what the contact to purchase says. If you are guaranteed free and clear title and get title insurance a QC deed is fine. However understand that a QC deed does not necessarily transfer ANY rights. You only get whatever rights the provider of the QC deed had.
I will take a property with clouded title for the right price. As long as I know what the issue is and what my risk is, I may decide the risk reward is worth it.
30 Replies
- Investor · Wellington, KS · Member since 2016 · 256 posts · 188 votes9yI wouldn't buy without a clean title insurance policy. The difference may be the cost of clearing the title or the value of the potential claim. I suppose if you were willing to take the risk of adverse claim it might work.
- Title Representative · Indianapolis, IN · Member since 2016 · 64 posts · 41 votes9y
@Joel Ortiz An option is to purchase a Search Report from a title company to show what is clouding title. If you feel comfortable with what's on title, buy via QC, and purchase your Owner's Policy after you take possession. I would be curious about what they are avoiding to pay by transferring by QC.
- Realtor · Detroit, MI · Member since 2017 · 184 posts · 33 votes9y
I know that here in the Detroit market, a very hot market right now, a ton of properties get sold on qcd. Mainly because it was previously bought from a tax sale. Here the cost to quiet a title can range from 700-2000 depending on whats clouding it. Its not an absolute terrible way to purchase, but for most buyers it is not preferred.
However, If you find some in a decent-good neighborhood with a steal price and the title isn't hard to clear, it may make financial sense.
- Professional · San Diego, CA · Member since 2015 · 58 posts · 6 votes9y
@Dustin Haviland By owners policy you are referring to title insurance correct. Is it any less secure buying the policy after purchase or harder to obtain a policy?
Also just wondering how the policy cost is calculated
- Investor · Newberry, FL · Member since 2013 · 11 posts · 2 votes9y
After permitting over 3000 mobile homes and site built homes I've found that "Quit Claim Deeds" are fast and usually executed between family members. Another one that I've seen over the years is: "This Indenture" which is accepted by all the county building departments here in North Central Florida. All three instruments, including Warranty Deeds, work and are accepted as ownership when applying for building permits. I'm not sure about the legal ramifications when lenders are involved or what other states allow.
- Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes9y
It would depend on what the contact to purchase says. If you are guaranteed free and clear title and get title insurance a QC deed is fine. However understand that a QC deed does not necessarily transfer ANY rights. You only get whatever rights the provider of the QC deed had.
I will take a property with clouded title for the right price. As long as I know what the issue is and what my risk is, I may decide the risk reward is worth it.
- Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes9y
@Joel Ortiz this is really something that a real estate legal professional should help you with. Given the context, where there are two different prices for different seller warrantee (or lack thereof) you really need a legal expert. After the great recession, there were topics here on BP about people who bought property where the liens and encumbrances were greater than the property value. I'm not saying this is your case, but the posters put themselves in a position of weakness by not knowing the legal aspects of holding title.
- Professional · San Diego, CA · Member since 2015 · 58 posts · 6 votes9y
Thanks for all the input everyone.
@Ned Carey I thought the only way you can be guaranteed clear title is by purchasing on a warranty deed.
So on my offer when it's accepted if in the addendums State that the property must have clear title, then my title insurance would cover that?
How do you get a clean title guarantee with a QC?
Are you in agreement that getting a title search before purchasing the property and if it's clear, a subsequent insurance policy gives me that guarantee?
My exit strategy was to sell the house to a first-time home buyer or a handyman on owner financing and then possibly sell the note.
Do you believe a note buyer would buy a house that was purchased on a quit claim
- Principal · Charlotte, NC · Member since 2010 · 200 posts · 89 votes9yWow lots of conflicting advise on here. A quit claim deed is a seller "quitting" all that is on title. I buy a number of properties each year where the deed is transferred from this particular seller I work with via a quit claim deed. I get title searched every time, I review what is on title and decide if I choose to accept what is on there (most of the time nothing is on there) I choose not to get title policies but that is my personal choice and experience and not something I would advise to anyone else. Once you get the deed and whenever you decide to exit the property you can still sell the property using a general warranty deed. The title company will do the research and make sure proper chain was established and in tact ... (They are less concerned about what type of instrument was used to transfer the deed between owners as long as it did not muck up the chain of title. ) So no worries.... In my experience If the deal is right... Title is clear... And you can get a title policy post close, it is a Go!
- Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes9y
@Joel Ortiz there are multiple issues here.
- What rights does the contract grant you
- What rights does the deed grant you
- What does the title search say about the title, it is clear or not.
- Is the title insurable.
These are four independent issues.
Contract
The contract should say whether you get clear title, Insurable title, and whether it is free and clear of all lens or not.
The contract can say the seller is guaranteeing free an clear title but you only get a Quit claim deed. If you later found the title wasn't clear your recourse would be to title insurance if you have it or Potentially the seller for breach of contract.
Deed
I could offer you a warranty deed on a property I don't even own. That would be fraud. The fact you have a warranty deed would be no more valuable to you than a Quit claim deed in that situation. Your recourse would be against me or again the title insurance if you have it.
A quit claim deed is a very weak deed. It says essentially "I give give you any rights in this property that I might have. But I am not saying whether I have any rights in it or not. That is your problem. "
Title search
However in the case above, if the title search shows that I am the actual owner and the title is good and free and clear of all liens and encumbrances, then you have a pretty safe situation. The title search will determine how valuable a particular quit claim deed is.
Insure-ability
The last issue is whether the title is insurable. Title can be perfectly good but for some reason the title insurer does not want to insure.
A great example is tax lien foreclosures. The title company may check the title including the tax sale foreclosure case and see that everything was done properly. However even though the title company knows it will win any challenges against the title, they are afraid because they believe a tax sale is more likely to be challenged. Even if they win they don't want the court and legal costs of defending the title.
Things are done a little different in CA. In my area, you get the property under contract, you give the contract to a Title company (basically the same as a escrow company or "Opening escrow") The title company does a "Title Search" Presuming everything is clear, they proceed with settlement. At settlement all back bills are paid, title insurance is normally issued, and the money received and dispersed. Then the title company records the deed and any mortgage in the land records.
All of which I explained above isn't necessary to know to do 99.9% of all deals. Most of this is splitting hairs. However I wanted to give you as many of the possibilities as I could.
- Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes9y
The basic difference between a warranty deed and a quitclaim deed is the liability of the seller. In a quitclaim deed there is no recourse on the seller. The do not guarantee the title to the property is clear, they are not even guaranteeing that they own the property. A warranty deed is a guarantee by the owner of good title, and they agree to defend your title. So if you have a derelict seller being able to sue him doesn't help you much, of course a bank has a lot of assets to go after if they sell you a bad title under a warranty deed. Both documents only pass title if the seller actually owned it. if the seller is not the owner it doesn't matter if you get a quitclaim or a warranty deed as far you being the legal owner, the difference is you can sue the seller if he did a warranty deed. If the person signing the deed is the legal owner it doesn't matter if the deed is by warranty or by quitclaim. This is the reason I recommend title insurance regardless of whether the deed is warranty or quitclaim.
I most often use quitclaim where the person selling owns less than all of the property. Since they do not own it all they only sell you the portion they own, and they cannot warrant to you the title is clear because other folks own part of it.
- Professional · San Diego, CA · Member since 2015 · 58 posts · 6 votes9y
Thanks all. I consider my answer question answered . Cheers
- Rental Property Investor · WA · Member since 2015 · 104 posts · 31 votes9y
Hey guys, Any advice on best way to get a property sold via QC? I have a property in Chicago that I actually made a loan on, was defrauded as my loan was not recorded and ended up in second position. I foreclosed on my second position lien but the first lien holder is still on title. They didn't respond to any communication until we went to quiet title. We have offered them the deed, and offered to pay them what is on the lien paperwork which is $45,000. They came back and said they wouldn't accept any less than $88,000 which somehow included late fees but refused to show us the promissory note that they made with the previous owner. We again told them to foreclose or take the deed and they have again stopped responding. The house is worth $150-160k but needs about $40k in rehab and just want to be done with this headache as I have dumped too much in lawyer fees already. Your advice and thoughts are appreciated!
I have thought of auctions and currently have a craigslist ad right now. I have made full disclosure of the lien and back taxes owed on the property, not trying to take advantage just trying to find the person who's right for this investment and risk (as it could be a big payoff if they never foreclose, since they haven't throughout the three years).
Doug
- 9yPaul AmegatcherPro MemberRental Property Investor · Brookville, OH · Member since 2016 · 488 posts · 363 votes
Why did you foreclose on the second position only and not the all the other liens? Also selling via quit claim deed will be the only option. I would not warranty anything else sense you have been defrauded in the past.
- Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes9yJoel Ortiz "How do you get a clean title guarantee with a QC" You don't. A QC just transferred whatever rights the person has to a property to you. I could do a QCD for the white house to you. I'll do so for $100. It simply means my rights to the White House (which are none) now belong to you. And more semantics but closing with title doesn't guarantee there are no problems. Just like buying fire insurance doesn't keep your house from burning down. It just means that if something DOES happen they'll take care of it (you still have counter party risk)
- Investor · Chicago, IL · Member since 2016 · 160 posts · 41 votes9y
I did a deal in Chicago south suburb when I first started investing with a group called Chicago Action Investors. Founder of that group aaron vaugn provided me with a wholesale deal and told me we will do a QC deed. I didn't know much about real estate that time and I trusted him for the deal. I met with him, the seller and the wholesaler in front of the house and signed papers in front of a notary and house was mine theoretically. However, one week later I went to village hall to get water turned on for the house so I could get rehab work started. To my surprise I was told the house does not belong to me! Village record shows house still belongs to previous owner even if I already paid for and had QC deed papers notarized. Village told me it doesn't count as it's not recorded in county office! And soon enough the seller came back saying she wasn't paid by the wholesaler what she was promised and claimed house still belongs to her. The village would not turn on water!...I had to engage an attorney and after a week of going back and forth I finally had to pay her off with extra money on top of what I already paid during QC deed and then get it recorded in the county. I guess if Aaron Vaughn had done his job right I would not have faced this issue...I will never do any deals with Chicago Action Investor group in future...
Long story short, make sure even if QC deed is done, it is done the right way, meaning get it recorded, engage an attorney etc like with any proper closing...it will save you a lot of headache.
- Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes9y
This has little to do with the deed type and more to do with understanding the fundamentals of property ownership. An unrecorded warrantee deed would have produced the same results.
- Real Estate Agent · Chicago, IL · Member since 2015 · 238 posts · 101 votes9y
@Joel Ortiz I had issues with Aaron of the CAI group as well. Many issues actually lol But of relevance to this topic, I had trouble doing a cash out refi loan because of the way I held title. I ended up quit claiming to get my LLC's name on to title as tenants in common w/ my partner's LLC name. We ended up getting rejected by several lenders because, basically, they don't like seeing 2 LLCs on title. It "complicates" things. We then removed my partners' LLC off title to try to alleviate that problem. However, many vendors wanted the title to be in place, as is, for at least six months. This is known as the seasoning period. We had inadvertently restarted the clock. These were stupid mistakes that could have been easily avoided had I been working w/ a real professional. In short, I'd echo what @Dhru Das said above; get an attorney involved to ensure you receive clean title and get it recorded properly. Good luck!
- Professional · San Diego, CA · Member since 2015 · 58 posts · 6 votes9y
@cody L i contacted numerous insurance companies and one of them said that they would offer me a insurance policy on the quick claim as long as they did the title search. This company was in Illinois. But only did work there. It wasn't a clean title guarantee.
- Realtor · Cleveland, OH · Member since 2015 · 2k+ posts · 857 votes9y
Worst way to buy a property....if it's even legit.
I can QUIT CLAIM you Quicken Arena and if you believe me and buy it for my price, later to find out I did not have any interest in you can't come back on me. Which would be a totally legal scamYou want a GENERAL WARRANTY DEED, worst CASE LIMITED WARRANTY DEED
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
its market specific. some its fine others its not.. always want to check with title company first to see if they will insure them before you use them as a buyer.. as a seller does not matter .. buyer beware.
- Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes9y
For others reading these posts about deeding property that people don't own, in many states including NC these actions would fall under other fraud statutes. We've seen this in the Raleigh area where someone just made and recorded their own deeds and moved people on in. Granted, some were legit (HOA foreclosure purchases) but others got him in trouble. See the latest story . I would recommend people consult an attorney before creating a deed to and selling a property you don't own, a technique that more than one poster appear to condone.
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Chris Martin This happened to me personally back in 1990... I had a borrower that I inherited when I bought the HML company I was running..
I caught him... He was making payments for his clients.. HIs client was the actual borrower but I only knew him.. the story was they invested in his syndications of his Texas apartments..
Well one payment was late and I called the borrower only to have them tell me they had no loan.. UG .. called my long time family lawyer who also owned a title company and sure enough.. forgeries all over the place.. forged reconveyances ( I think you may call them satisfactions).. plus forged mortgages etc etc etc.. He got 9 years in San Quentin.
All of my clients had title insurance and the title insurance paid off for forgery.
I had another borrower forge a recon / satisfaction on his health club .. my loan was removed. he was an ex NFL player.
his HI status in the community kept him out of jail just barely.
this is more common and if folks really understood it it would be rampant.. LOL so I don't really like to talk about how its done we don't need to educate those who live real estate investing on the fringe you know the types.
- Rental Property Investor · WA · Member since 2015 · 104 posts · 31 votes8y
Hello everyone,
I am sorry I didn't have this post "followed" so I wasn't notified on everyones post.
Update: I was able to deed the property to a lawyer and gave him full disclosure of everything that had happened. I paid any fees that were already charged to the property and he took it as is.
Lesson learned: Get your own lawyer when you make a private loan. (2) When you go to foreclose, get an attorney that specializes in foreclosing. This could have been avoided if my attorney knew what he was doing and basically included the quiet title case within the foreclosure. Unfortunately I went through 4 different lawyers and even in the end, didn't get what I needed from them. They enjoyed the income from dragging this deal through the mud, although I take responsibility for all my mistakes that created the issue.
It was an interesting story and one that I think everyone has never heard before. Let me know if any of you have any more questions, I am not a lawyer but can give you the details if you like for your own learning.
Thanks to everyone who contributed
- 8yTom GimerBusiness MemberDMV · Member since 2017 · 3k+ posts · 3k+ votes
Originally posted by @Dustin Haviland:
@Joel Ortiz An option is to purchase a Search Report from a title company to show what is clouding title. If you feel comfortable with what's on title, buy via QC, and purchase your Owner's Policy after you take possession. I would be curious about what they are avoiding to pay by transferring by QC.
You can't purchase an owners title insurance policy after taking possession -- unless a full title search is undertaken -- and at that point when an owner requests this the red flags are already flying high.
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