Quit Claim Deed, Yes or No?

Houston, Texas
Tax Liens & Mortgage Notes
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Quit Claim Deed, Yes or No?

Charles Mazzini
Katy, TX · Member since 2022 · 8 posts · 5 votes

I won an auction on a house and the contract consist of a Quit Claim Deed.  I did research at the county clerk office and the property seems to have no liens, but from what I understand, there is not only no warranty on the deed but no title company will insure a QCD.  In addition, from what I understand, once a QCD is issued on a property, the property can no longer have a Special Warranty Deed if I sell it.  This means that I may have difficulty selling in the future.

So my question is this. Does anyone recommend buying property on a QCD or should that be something to avoid at all cost?

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Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
3y
You CAN get title insurance with a Quitclaim deed.  When I was licensed in Massachusetts (not too long ago), virtually every property conveyed with a QC deed and buyers routinely got title insurance that covered both them and the lender.

Whoever provides that insurance will run a title exam and it will have to meet their standards, but I assure you, QC deeds can be insured.

To be sure we're on the same page, a QC Deed transfers whatever interest the seller holds to the buyer.  It doesn't not guarantee a clear chain of title.

A warranty deed protects the buyer from prior clouds and defects.  I've only seen a SPECIAL Warranty deed in foreclosure sales.  That protects the buyer from defects that occured during the seller's ownership of the property.  In a foreclosure, the seller is typically the bank, so they're trying to shed liability. https://www.investopedia.com/t...

The bottom line is that you need someone - attorney or title company - to do a thorough title search and issue a policy that protects YOU and not just the lender.

Good luck!
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  • Jamie Bateman
    Investor · Baltimore County, MD · Member since 2014 · 466 posts · 439 votes
    3y

    I recommend you speak with real estate attorneys and title companies in that state. I have bought properties via QCD and later sold said properties via Warranty Deed with title insurance. I think QCDs in TX can be more problematic than in other states, but I am not sure if that is where the property is. Do you have a choice at this point? Or are you saying you might walk from the deal entirely? 

    1Reply
  • Charles Mazzini
    OP
    Katy, TX · Member since 2022 · 8 posts · 5 votes
    3y

    So my attorney does not recommend it but also says that I have to weigh the risk against the reward.  I won property is $200K.  Value is $250K.  Yes it is in Texas.  Yes, I can decline the contract and walk away. 

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  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    3y
    You CAN get title insurance with a Quitclaim deed.  When I was licensed in Massachusetts (not too long ago), virtually every property conveyed with a QC deed and buyers routinely got title insurance that covered both them and the lender.

    Whoever provides that insurance will run a title exam and it will have to meet their standards, but I assure you, QC deeds can be insured.

    To be sure we're on the same page, a QC Deed transfers whatever interest the seller holds to the buyer.  It doesn't not guarantee a clear chain of title.

    A warranty deed protects the buyer from prior clouds and defects.  I've only seen a SPECIAL Warranty deed in foreclosure sales.  That protects the buyer from defects that occured during the seller's ownership of the property.  In a foreclosure, the seller is typically the bank, so they're trying to shed liability. https://www.investopedia.com/t...

    The bottom line is that you need someone - attorney or title company - to do a thorough title search and issue a policy that protects YOU and not just the lender.

    Good luck!
    2Reply
  • Charles Mazzini
    OP
    Katy, TX · Member since 2022 · 8 posts · 5 votes
    3y

    @Charlie MacPherson  Thank you for your response.  It seems to be quite a bit different in Texas, dang it!  LOL!  https://www.legalzoom.com/arti...

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Charles Mazzini

    Speak to a title company. This isn’t the first time this has occurred. Ask the auction company if they have a title company who you can later get insurance on the property.

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  • Rod HanksBusiness Member
    Insurance Agent · Dallas, TX · Member since 2013 · 743 posts · 462 votes
    3y
    Quote from @Charles Mazzini:

    I won an auction on a house and the contract consist of a Quit Claim Deed.  I did research at the county clerk office and the property seems to have no liens, but from what I understand, there is not only no warranty on the deed but no title company will insure a QCD.  In addition, from what I understand, once a QCD is issued on a property, the property can no longer have a Special Warranty Deed if I sell it.  This means that I may have difficulty selling in the future.

    So my question is this. Does anyone recommend buying property on a QCD or should that be something to avoid at all cost?


    I’m in Dallas Texas and a QCD is a no no. Follow your attorneys advice not any random person that’s never invested in Tx. 

    Rod Hanks Insurance4.9155 Reviews
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  • Lucia Rushton
    Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
    3y

    @Charles Mazzini. What would it cost you to get the property to value at $250k ? What condition is it in ?

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  • Account Closed
    Rental Property Investor · New Braunfels, TX · Member since 2022 · 409 posts · 408 votes
    3y

    I won an auction on a house and the contract consist of a Quit Claim Deed. 

    @Charles Mazzini Was it a tax sale or a foreclosure sale? The answer is different depending on what kind of auction it was. I’ve bought several of each here in Texas the last few years. The only difference for me is once the auction is over and you have “won” there is no getting out of the deal. You own it now. 

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  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    3y

    @Charles Mazzini   Most attorneys in Texas don't like quit claim deeds for most purposes....it doesn't establish ownership, but disownership.   Something like....I don't know if I own any interest in the property, but if I do, I am giving whatever rights/ownership I have in the property to you.

    Probably the best thing to do is go to your title company...give them the deed and the property and ask them what you will need to do to sell it with title insurance in the future and if that is even possible.

    I see a lot of the treasury auctions give QCD....so IRS/DEA/HSI etc.   Might have to do quiet title action or wait 2-4 years to get title insurance and then you should be able to transfer/sell.

    How do you just walk away from an auction you won?

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