Top 3 Reasons Why You Shouldn’t Use A Quitclaim Deed To Transfer Title

Photo Credit: Unknown

Photo Credit: Unknown

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. When you look at the differences between the deeds and scenarios for which each is best suited, you might reconsider using that Quitclaim Deed to transfer title.

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 liensNot 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 titleWhat 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: The Special Warranty Deed.

Want to know when quitclaim deeds are supposed to be used? Check out this article!

2013 Industry Partners Conference

Industry Partners Conference

 

It’s that time of year again!

The 2013 Industry Partners Conference is here once again! Each year the Arizona Association of REALTORSArizona Mortgage Lenders Association and Arizona State Escrow Association get together for this hugely popular event (it always sells out) to discuss important topics in an ever-changing market.

Professional Escrow Resources and docprepper.com are sponsoring the event again this year, and we couldn’t be happier!

Interested in signing up? Better hurry! This is the 15th Annual Event, and it’s sold out ever since we can remember.

 

http://azmortgagelenders.com

http://azmortgagelenders.com

April 22, 2013 is Earth Day! Here’s a few things we can all do to help.

Earth Day 2013

Monday, April 22, 2013 is Earth Day!

 
 

How can you partner with us to help out and save money? Easy!

At docprepper.com, we strive to be green whenever possible! 
 
 
We take electronic signatures from our customers whenever possible. We electronically record our documents in every Arizona County. Professional Escrow Resources, our Certified Legal Document Preparer has streamlined in house processing to minimize the amount of hard-copy paper required for each transaction.

 
 

That’s why in recognition of Earth Day 2013, we’re offering a 15% discount on all of our document preparation services if you choose electronic delivery of your docs!

 
 

Maybe you’ve been looking for the right time to add your spouse to title, but you don’t know the best way for your State. Ask us if you can use an Acceptance of Community Property with Right of Survivorship with your deed.

 
 

Maybe, you want to transfer some investment property into your LLC, but your’e not quite sure how to do it. Send us an email, and we’ll walk you through it.

 
 

Perhaps you need a Promissory Note or Deed of Trust to secure a lien on your property. Give us a call, and we will take care of everything.

 
 

All week long, we’re giving 15% off all electronically delivered documents. If you order online, just use Coupon Code: 15PFOREARTH13. If you call or email, just let us know and we’ll be sure to apply the discount. Let’s work together to save some our natural resources and some money, too!

 
Call today! 855-362-3279

Industry Partners Day!

Today in Scottsdale, AZ, docprepper.com was able to attend the annual industry partners day! Every year, representatives from Escrow, Title, Mortgage Lending and REALTORs get together to discuss important topics that affect the entire real estate market. We are happy to sponsor this event, and want to give a big thank you to the Arizona State Escrow Association, Arizona Mortgage Lenders Association and the Arizona Association of Realtors for putting it together.

To all of our new friends we met today, thank you for visiting our site! As you can probably tell, we’re undergoing a bit of construction, so if you need assistance with anything, just give us a call at (855) DOC-EASY or shoot me an email at [email protected]. Thanks again, and check back with us soon for the latest news!