what does a "quit claim deed" signify?

Question

Hey all, new investor here with 1 deal in the pipeline. this is a deal im in at the moment.

I made an offer an a 3 unit investment property and the seller comes back saying “ I could work with your price however this is a cash sale with immediate closing. If funds are received today the quit claim deed can go off to the recorder Monday since its going to be pretty cut and dry; as is, no tax prorations, or warranties offered. With the amount of attention its received I will not be holding it. ”

With all education I have taken I haven’t heard of this. What would you do in this situation?

Thank you in advance

Charlie MacPherson · Answer

Account Closed A quitclaim deed is one where the seller transfers whatever rights he has in the property to you.  Those rights may be encumbered by liens, encroachments or even by previous title defects.

The first thing to do is to run a title search to see if there are any liens on the property.  Only then should you proceed.

The second thing to do is to buy owner's title insurance.  That protects you in the event of a future challenge to the title.

I was licensed in Massachusetts and Maine.  In Massachusetts, I saw quitclaim deeds on almost every property I sold.  That's the custom there.  In Maine I saw warranty deeds and only rarely a quitclaim deed.

The seller's comment "cash sale with immediate closing" raises a red flag for me.  It might be nothing, but it might be that he's rushing you for nefarious reasons.  Is he allowing a property inspection?  If not, I'd be very suspicious of defects that he doesn't want uncovered.

Far better to miss out on a good deal than to get rushed into a disaster.

Good luck!

Howard Herrington · Answer

Hello Account Closed is correct in saying that many deals in Massachusetts are done with Quit Claim deeds however, you should always request a due diligence period in your offers no matter what the expected close time is.

By definition the Quit Claim deed is used to legally transfer the property but does not provide any warranty as to whether or not the title is clear therefore if there are other interests in the property that were not disclosed to you, the seller is not held liable and you are responsible.

With that being said, if you have not already done so, I would request a 10 day due diligence period to research title issues and be ready to walk away if that is not granted.

Jason Kern · Answer

Get an attorney or title company to do the title work. That's what they're for! Then, buy a title insurance policy at closing. ALWAYS buy a title insurance policy. If the title insurance policy comes back with some exceptions before closing that they won't "cover over" then back out or give them a chance to correct it. A quit claim is just fine as long as your title insurance policy covers it. You'll discover this through your title company or title attorney.

Note: This is free advice from a stranger but quit claim deeds, often misunderstood, are something you can capitalize on.

Brent Coombs · Answer

Account Closed, a "Quit Claim Deed" means that the "Seller" may not have any part of the property's Ownership!  ie.  It may well be a scam from start to finish!

I suggest: Run away from "Quit Claims".  Often/usually not worth the paper they're written on (unless the history of the Ownership is known within the actual Owner's family, and one family member "quits" their interest in the property to another family member - which was the original purpose of "Quit Claim Deeds").

Thanks for asking.  Hope this has helped.  Welcome to BP.  Good luck...

Account Closed · Answer

@Brent Coombs @Charlie MacPherson @Howard Herrington @Sean Delisle @Bill Brandt thanks everyone for the responses! i am going to tell him 2 week inspection period or no deal.

Bill B. · Answer

Think of it this way Jon.  I’ll give you a quit claim deed for that property for $100.  All it means is I give up any rights I have to the property.

Sean Delisle · Answer

I always ask for a Warranty deed when working with buyers.  That deed goes back the furthest.  Make sure you use a title company to search the title and request a warranty deed with any purchase cash or not.  Cash has nothing to do with it.

what does a "quit claim deed" signify?

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