Flipper/Rehabber · Union Springs, NY · Member since 2019 · 32 posts · 17 votes
Hi everyone, I posted this in starting out since I don't think I'm really up to that "next level" yet, but this isn't my first deal. It might be good for those doing their first deals to see this as well.
I've got an off-market duplex that I found when making an offer on a SFH - both deals are being wrapped up into this one purchase but I'll focus on the duplex for the sake of this conversation. The seller has "owned" the property for a few years but never went through probate. We are at almost a 2 month delay now, originally they offered a quit claim deed which I turned down, and now they are offering a warranty deed.
What kind of risks are there to close with a warranty deed? I would be looking to refinance this property within the next 12 months and hold it in my LLC. The numbers look good so I'm willing to spend a little time on seeing how I could make this work, but I don't want to accept a ton of risk either. Any thoughts?
I hope you're doing great. Traditionally, a Warranty Deed is much better than a Quit Claim Deed. There are also two types of Warranty Deeds, General and Special. A General Warranty Deed provides the most protection, guaranteeing clear title, whereas a Special Warranty Deed guarantees title only for the period the seller owned the property. If they are offering a General Warranty Deed then that would be excellent, a Special Warranty Deed would be good but not perfect as it would basically state that they didn't do anything to encumber the property during their ownership.
One concern to note is that if the property never went through Probate, then there is always the risk that the property can go through the probate process unless it has gone past the statue of limitations or been acquired by adverse possession. It can always become an issue, and could hinder the refinance process potentially. The company could decide there are no issues, but it could be you taking a chance on the property's title.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.