October 3, 2013 by Aaron Scott ·
Let’s take a moment to address the
differences between a Quitclaim
Deed and a (Special)
Warranty Deed. There are several points to consider when choosing
the correct deed to use for a title transfer. Let’s look at differences between
the deeds and a couple of scenarios in which they might be used.
Quitclaim Deeds: Why They Stink.
A Quitclaim
Deed (often mistakenly referred to as a “quick claim” deed) is
a popular instrument for title transfers. However, when choosing a deed its
popularity should not be a determining factor! Many different deeds will convey
title to real property, each will be useful for different situations. One of
the most important things to keep in mind when choosing a Quitclaim Deed is
that it doesn’t even say whether or not the person conveying title owns the
property! The grantor offers no “guarantees” as to their ownership interest
in the property or the condition of the title, which brings us to reason number
3…
Reason
Number 3: NO GUARANTEES.
Although a quitclaim deed does
convey title, doesn’t make any other guarantees, warranties or assurances.
Basically a quitclaim deed says this:
“I don’t promise that this property
has a clean title, or even that I own it at all! Whatever interest I may have
in the property I’m giving to you. If you find out later you don’t have a
marketable title, you can’t sue me! I didn’t promise you anything!
Bwahahahaha!!!”
Okay, maybe that’s a bit dramatic…
but you get the point! Many bloggers and “experts” (sometimes even real estate
attorneys or a divorce court) might advise you to use a quitclaim deed. Lots of
people have used them to transfer property into or out of a trusts, limited
liability companies, between husbands, wives and family members “because you
don’t necessarily need such strong guarantees in that situation”. Well that
may be true, but it’s certainly not the only thing to think
about.
Reason
Number 2: THE “SUBJECT TO” SUBJECT.
You might think that a you have
to use a quitclaim deed because the property isn’t “free and clear”
from liens? Not so! This is probably one of the more
common misconceptions we’ve heard regarding quitclaim deeds (and Warranty
Deeds). The argument goes something like this:
“Well I can’t use a
Grant Deed, Warranty Deed or a Special Warranty Deed because those documents
say the property is free from liens… I have a mortgage on the property so
I have to use a quitclaim deed!”
Well, that’s almost true.
Warranty Deeds and Special Warranty Deeds do contain verbiage
that makes some sort of guarantee as to the condition of the title. What
they actually say, however, is that all existing claims have been disclosed.
Warranty Deeds do not say the property is “free and clear”.
You see, each deed has a section that contains “subject to” verbiage. In
the “subject to” section of the deed, certain elements are called out as being
part of the transfer. A typical example of “subject to” language is as follows:
“SUBJECT TO: Current taxes and other
assessments, reservations in patents and all easements, rights of way,
encumbrances, liens, covenants, conditions, restrictions, obligations, and liabilities
as may appear of record.”
This is significant because any
liens that are recorded in the public record are “part of the package”.
The grantee has no legal recourse to go back to the grantor because of a lien
on the property he didn’t know about, so long as it was properly recorded (and
therefore disclosed). When you purchase a title insurance policy, the title
company will do a title search and list everything they find on the “Schedule
B” section of the title commitment.
Reason
Number 1: TITLE COMPANIES HATE ‘EM.
Many title examiners will not accept
a prior conveyance made by quitclaim without additional documentation signed by
grantor. Remember, a quitclaim doesn’t guarantee anything! So when a title
officer sees a quitclaim deed in the chain of title, they may question whether
or not the grantor in the quitclaim deed had something to hide. Imagine how
difficult it would be to track down an ex-spouse or trustee of a trust (who’s
probably out of the country or deceased) so they can sign off on this property,
again… just clear up the chain of title because the title officer
doesn’t like the quitclaim deed. Now this is holding up the escrow! People want
to move in and unpack! People want their money! If you don’t have anything to
hide, why not use a stronger document? Here’s a good one that you can use in
almost every state:
Special Warranty Deed
A Special Warranty Deed is quickly becoming a preferred instrument when transferring title. Find out why those "in the know" favor this instrument, and let docprepper.com help you with yours!Many industry insiders will request a Special Warranty Deed when transferring ownership of a property. Why is this? With a General Warranty Deed the "Grantor" (Seller) makes a warranty that there are no issues with the chain of title, going back to previous owners. A Special Warranty Deed, however, only makes guarantees for the period of time the grantor actually owned the property. It says, "I did not cause any problems to the chain of title during my period of ownership" but doesn't go further than that. and gives more protection to the "Grantee" (Buyer) than a Grant Deed or a Quitclaim Deed, but not as much as a Warranty Deed.
Docprepper.com can accurately prepare Special Warranty Deeds to your specifications, assist with signing and notarization, and record the document with the County Recorder's office. We make the process simple, and keep you informed every step of the way!
What are the steps involved? We guide you through the information to determine what attachments you need Help you find a copy of the current vesting deed Prepare and deliver your documents with signing instructions (or you can sign in our office for free) Record your document with the appropriate county. That's it, you've successfully transferred title! We're there for you every step of the way.
- See more
at:
http://www.docprepper.com/products-page/deeds/special-warranty-deed/#sthash.WcEU2cP4.dpuf
- See more at:
http://www.docprepper.com/top-3-reasons-why-you-shouldnt-use-a-quitclaim-deed/#sthash.Dv0ZjZ4R.dpuf
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