Quit Claim Deed

Asked by Cathy, Florida Sat Aug 25, 2012

Interested in a foreclosed property in Florida, the seller provide Quit Claim Deed only. What are the risks associated with this kind of deed?
If I can purchase a home owner's title insurance, is it sufficiant to protect me from the risks?

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5
Centermac Re…, Agent, Fremont, CA
Sat Aug 25, 2012
Usually a title insurance protects any defects in chain of title subject to exclusions listed on the title report. Whenever you buy a property through a regular sale, you can assume certain protection in terms of recorded instrument. But if the defects do not appear on the recorded instruments, they might be excluded from coverage especially in the case of foreclosed property and in Florida. However, there will always be the possibility of disgruntled former owner who wants to get their revenge on the bank. Often times the new owner may get dragged into the lawsuits between the former owner and the lender. The risks are there but are slight so that it may still be worthwhile to invest in it in light of potential discounts from the purchase of foreclosed property. Never put all your eggs in one basket though. I wouldn't bet my life savings on this. But if you plan to invest in several smaller properties, you can spread the risks this way.
1 vote
Don Tepper, Agent, Burke, VA
Sat Aug 25, 2012
Big risks.

A quit claim deed says, essentially: "I give up any rights that I may have in this property."

For example, would you like to buy a quit claim deed for the Statue of Liberty? I'd be glad to sell you one. It's legal. It's legitimate. It's valid. I will sell you whatever rights I may have to my ownership in the Statue of Liberty. If it turns out that I do own it, then it's yours. But if I don't own it, then you've received nothing. I didn't promise you that I owned it. I only said (via the quit claim deed) that I'd give any ownership that I did have to you.

In your case, if someone else owns the foreclosed property--or if someone else asserts that he/she owns it--then that's a big problem. You're absolutely right to consider title insurance . . . but I'm not even sure it'd be available on a quit claim deed.

Another issue--and I'm not sure of the answer--is what would occur when you attempt to sell the property. That is, what type of deed you'd have to offer and transfer to the buyer. Please check into that. Just as you're legitimately being cautious, anyone buying that property from you would be awfully reluctant to buy without a more solid deed.

Check with a lawyer. Start with a title company that should have lawyers knowledgeable in such issues.

Hope that helps.
1 vote
Mike Sullivan, Agent, Gainesville, FL
Sat Aug 25, 2012
It is important for you have title insurance on the property.....the insurance will protect you against things like liens and boundry issues....the level of risk is greatly reduced by the title insurance. Be sure you have all insprections done on the property as well to protect yourself even further. For foreclosures, it is rare for the seller to provied a warranty deed in a foreclosure as they have no first hand knowledge of the property
1 vote
RUNZI LOAN F…, Home Buyer, New York, NY
Wed Nov 18, 2015
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0 votes
Ruth and Per…, Agent, Los Gatos, CA
Sat Aug 25, 2012
Hi Cathy

Are you referring to a Seller who is a Bank as it i foreclosed or a private individual/s?

Or is the property a Short Sale headed to Foreclosure, where the Seller is considering a Quit Claim Deed?

If so do you know from the Seller i.e. the Private Individual/s what all the liens are?

Your best bet will be to start with a Title Company and a Lawyer.

Good luck
Perry
0 votes
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