Warranty Or Quit Claim Deed….. Difference?
I am a bit foggy on the different types of deed paperwork. Who decides on which type of deed transfer to use. If a seller signs a warranty deed over to me and later there ends up being problems with who actually owned the property, who is liable and how does that affect things. I would be working with a title company on a sub2 purchase, would they steer me right on how this should go? Are they accountable for any problems that might arise then? Any info to help clear this up for me is appreciated.
Doug
On a straight & normal RE purchase, generally I'd want a warranty deed.
As in any other warranty, that's a guarantee that the seller does own it as he's said, and then his title co. insures that title...so if any subsequent problem with that title arises, the title ins. co. has to straighten it up for you, pay for the legal, whatever.
A QC deed just deeds you whatever interest the seller might own...from zero to 100%, but there's no warranty or guarantee that S owns anything.
On sub-to deals, generally B is in no position to demand WD from S, so all he's gonna get is QCD, and buyer needs to check out the title, pay for title policy, so he knows the legal situation on the title.
Hi JohnMerchant,
I still don’t understand a few things. You stated that the buyer is in no position to demand a warranty deed from the seller. Why would that be? Is it customary to use a quitclaim deed initially in a sub2 deal and then straighten up the title when the seller’s mortgage gets paid off. I plan on obtaining a house sub2, rehabbing it and reselling it and therefore I wont be using the sellers initial mortgage for a very long time. I was under the impression that any quitclaim deed will cause headaches later when trying to clear up the title. Obviously I am a “newbie” at this and I appreciate the feedback.
Doug
I 'm in no position to say what Mr. Merchant meant.
It is my opinion that we as the investors generally have an advantage over the sellers in this matter. We generally direct the transaction, not the other way around. If you put a Warranty Deed in front of them, and inform them that this document facilitates the change in ownership, They won't generally tell you that they will only sign a Quit Claim Deed. The Warranty Deed Warrants that they have not misrepresented their position in the transaction, and have told you of all the leins against the property. That's pretty much it. If there are problems with title down the road, the difference is that you are in a stronger position with a Warranty Deed than you are in with a Quit Claim Deed.
Does this mean that you win? Not always.
Good Luck,
Jeff