In “Quiet Title Vs Quit Claim Deed: Quit Claim Deeds Explored” the topics I’ll be covering are:
- The Types of Property Transfer Deeds
- Knowing When to Do a Quit Claim Deed or a Quiet Title Action
- Difference Between a Warranty Deed and a Quit Claim Deed
- Property Transfer Deeds Used by Counties
- The Quiet Title Process
This is part 2 of a 2-part series. You may read part 1 here.
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The Types of Property Transfer Deeds
There is a lot of confusion about quit claim deeds, warranty deeds, sheriff’s deeds, commissioner’s deeds, and treasurers’ deeds. This article is a step in the direction of simplifying the discussion and making this more clear.
I’m Ted Thomas, and I’ve been involved in the tax defaulted property business for 30 years. This segment of the traditional real estate business is little known, although it is lucrative for the knowledgeable investor.
There’s a considerable amount of confusion about the quiet title vs quit claim deed and where and how to go about their correct use. Title companies are your go-to source for information when you’re a buyer or a seller.
Knowing When to Do a Quit Claim Deed or a Quiet Title Action
For the many years I’ve been involved with tax lien certificates and tax-defaulted properties, I have noticed ignorance of when to use a quit claim deed or when to employ an experienced professional to guide one through the quiet title process.
In the over 3,000 counties across the United States where tax-defaulted property auctions take place, you will find clarity at the county records and on the various auction sites.
Real estate property taxes in default are covered under mandatory rules, and the county treasurer will confiscate properties for unpaid property taxes.
Regarding the quiet title vs quit claim deed, what you need to know from a practical point of view is that a quit claim deed transfers ownership of a property from one party to another.
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Difference Between a Warranty Deed and a Quit Claim Deed
Normally, transferring real estate from one person to another is accomplished with a real estate deed. That deed is normally a warranty deed, which promises the person transferring the property has a good title and the right to sell it.
The warranty deed includes a certain protection for the buyer such as no liens on the property, no mortgage, no deed of trust, no tax lien, and no creditor claims.
The title company will always check the official county records to ensure that this warranty is valid.
Here’s the big difference. A quit claim deed transfers but makes no promises at all. A quit claim can only transfer what that particular person owns, which may be 50% of a property or 10 % of a property.
Person A using a quit claim deed only transfers what they own. For example, when married couples divorce, one party may quit claim their interest in the home and the other party accepts the quit claim and now owns 100% of the home.
In most instances, no title research or title insurance is issued. The new owner receives it with no guarantee. The person issuing a quit claim deed may only convey using a quit claim for what they own.
Property Transfer Deeds Used by Counties
There is a different challenge when it comes to tax-defaulted property. The treasurer will transfer the property to the highest bidder at the auction.
The transfer document is definitely not a warranty deed. The treasurer will issue a sheriff’s deed, commissioners deed, or tax collector’s deed. No matter what the title of the deed, it will have the effect of a quit claim deed.
At tax-defaulted auctions, the properties are sold as-is. The county transfers the property to the new owner, and the transfer device is a quit claim deed. That simply means the county is accepting no responsibility for the physical condition of the property. The county does not guarantee, warranty, or make a claim for any of the defects in the title report.
Buyer beware at the tax-defaulted auction. The risk of a poor structure or property condition or title defects is solely the buyer’s responsibility.
The Quiet Title Process
What is a quiet title vs quit claim deed? In most instances, the buyer will be purchasing the property for resale, and the title company will not accept a quit claim deed from the county as clear title for all the reasons I have stated.
To correct the defects requires research of all claims against the property. The new purchaser now owns a tax defaulted property will all those claims.
What happens next? Savvy buyers locate qualified experienced attorneys to quiet the title. It’s called a quiet title action. This is a lawsuit that will require 3-6 months to complete.
My experience is limited, however, investors should be aware that a quiet title, which is a legal action, must be signed off by a judge or a court-order issued.
We hope you enjoyed Ted’s lesson, “Quiet Title Vs Quit Claim Deed: Quit Claim Deeds Explored.”
People often confuse a quiet title vs quit claim deed. A quitclaim deed is a way to transfer ownership of property. The title is transferred from the grantor to the grantee. However, unlike with a warranty deed, which guarantees that the title is good, the quitclaim deed absolves the grantor of any responsibility for the condition of the property or any defects in the title. The grantee is responsible for it all.
To ensure that the title is clear, the grantee may do a quiet title action, which is a legal process that takes 3 to 6 months and requires an experienced attorney.
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Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.
Ted Thomas is not an attorney at law or a real estate broker. This is strictly informational. Ted is not a legal advisor. Investors, newcomers, buyers, and sellers should employ experienced attorneys and other accounting professionals for advice. Ted Thomas is an author and a guide for those who are learning tax lien certificates and tax-defaulted property.