As a real estate investor, a mortgage broker, or anyone else in this field, you need to keep in mind that it is all a numbers game. For example, I have to tell myself to stay motivated so that I can continue to work my way to the top. There are some questions you can ask yourself to help push yourself in the right direction.
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The Quit Claim Deed, every homestead should have one! Before I begin defining the pros and cons to using a quitclaim deed, I feel it is important to first define what it is. This deed is a real estate contract that is essential to legally transfer ownership of land from one person (the grantor) to the other (the grantee). The deed defines the piece of parcel (land) by location, address, city, state, county and acreage. It is the grantor’s responsibility to name the grantee, and to be legal it must be notarized.
Although the grantor names a grantee in a quitclaim deed, there is no guarantee that the property is the grantee’s outright. So keep in mind that there are limitations that you should be aware of. All interested parties that desire a stake in the property must have their signature on the deed or they waive their rights to any type of ownership. To better understand how this works, take the following case as an example: In 2003, a close friend of mine was dying of a terminal disease. All he had was his piece of property, which the bank legally owned and his daughter who lived with him. As he approached that day of departure, he knew to protect the interest of his property he had to put a quitclaim deed together naming his daughter as the grantee. By doing this, he was insuring his daughter had a roof over her head after he had passed as long as she kept the mortgage payments up. But without general warranty deed in place he took a risk of a third party snatching the property from her. My friend was not as wise as he thought with this issue. In order to transfer the property legally, there needs to be a valid delivery of the deed. With his death there was no one with legal authority to deliver the deed. If you consult an attorney on this, you will no doubt discover that the deed held by his daughter is a nullity and that she did not receive good title. Ultimately if she decides to sell the home there could be major issues. Over a months’ time, I receive more than 10 questions pertaining to the proper use of a quitclaim deed. The above case concerning my friend doesn’t always deliver the message that “one should do their research” and look into what other deeds are required. At most, consider consulting a real estate attorney especially if you know life is changing for your family members and you in the near future. Here are a few other questions I am asked regarding some of the pros and cons around quitclaim deeds: What is the quitclaim deed commonly used for? • The quitclaim deed is commonly used in divorces whereas one party is staying in the home. The deed releases the party who is leaving the home of the legalese surrounding ownership of the home. • The deed is used if siblings inherit a family home and share ownership allowing them to sell the home to another sibling thereby transferring ownership. Is there another warranty deed I should consider? The negative thing about this quitclaim deed is the lacking guarantee. I would suggest using a general warranty deed that comes with six promises: • Guarantees the grantor does in fact have ownership of property • Authenticates the grantor’s right to convey the interest in the property • Ensures that the property comes without the encumbrances such as mortgages or liens • Guarantees that third parties will not have any legal claim in it • Covenant of warranty • Ensures that the grantor will take the necessary steps if the grantee’s title should show any imperfections An estate attorney or realtor can best advise you on what action you should take where it concerns filing a quitclaim deed. I would love to continue sharing here but if I do you will be overwhelmed by the questions and perhaps lose interest. Know this! If you want a valid option to giving up property, you are correct in using a quitclaim deed and since transfer of ownership rights is not guaranteed it would be wise to accompany it with a general warranty deed.
Did you know that seller personalities can hinder your real estate transactions? All investors must learn to deal with these.
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