Today I’m answering your questions about types of property deeds, and the topics I’m going to cover are:
- Clearing Up the Confusion About Types of Deeds
- Subdividing Land to Transfer Real Estate
- What’s Important Is the Content of the Property Deed
- Warranties of Title
- Counties Sell Property With a Quitclaim Deed Transfer
- The Quitclaim Property Deed Will Absolve the County of Responsibility
- Why You May Need a Quiet Title Action
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Clearing Up the Confusion About Types of Deeds
I’m Ted Thomas, and I’ve been involved with tax defaulted real estate for over 30 years. I’ve discovered through experience that there are many different types of land, many different types of property deeds and that most people just want a home with a lawn, driveway, and garage.
If you’re a newcomer, expect a lot of confusion amongst buyers and sellers and in many instances even professionals about the different types of property deeds.
Fortunately, most real estate transactions will be finalized by a title company or an attorney that specializes in the transfer of real estate.
Obviously, there’s a lot of money at stake in most real estate transactions, and that makes all concerned nervous.
The problem for the average person is you don’t know what you don’t know. People make mistakes, and they get confused.
Subdividing Land to Transfer Real Estate
When I discovered tax-defaulted properties 30 years ago, I couldn’t believe that real estate was being sold with the starting bid of the back taxes.
The county would deed the property at such a low price to anyone who paid at least the delinquent property taxes. The county wanted money, and as the buyer, I wanted the deed.
In one instance, I purchased a large home on 12 acres, cleaned the property, did some limited rehab, and put it up for sale. Buyers came and viewed it, but they didn’t want to take care of 12 acres.
After talking with experienced people, attorneys, brokers, and county officials, I subdivided the property into two parcels. One was 7 acres, which I sold with the property, and the other was 5 acres, which I kept.
What’s Important Is the Content of the Property Deed
What’s my point in telling you this? You need to be flexible and think outside the box. The county just wanted to sell the property, collect the taxes, and pay the county bills. Once that happens, they’re happy.
The county will issue a deed, and the deed transfers the property to the new auction buyer. They could issue different types of property deeds. The deed could be a treasurer’s deed, a sheriff’s deed, or it could be a quitclaim deed.
The title of the deed is not the most important part of the point I’m making. The content, the narrative, of the deed is very important.
There are many types of property deeds. For example, a deed of trust is a loan document. Think of it as a mortgage. A grant deed is a deed that passes one owner to a new owner.
Warranties of Title
In the retail market, buyers want a warranty deed from sellers, meaning the buyer expects a warranty from the seller that states the title is clear of encumbrances. To ensure the new buyer receives a property with no encumbrances, buyers require a clear title and title insurance.
Retail buyers are excited to buy and demand clear titles. That’s why we have title insurance, to guarantee no encumbrances.
Auction buyers receive a deed which may be a treasurer’s deed, sheriff’s deed, or quitclaim deed, and in all cases, the effect is a quitclaim deed. What does that mean?
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Counties Sell Property With a Quitclaim Deed Transfer
Quitclaim means that when the county sells the property at auction, they’re accepting no responsibility for the condition of the title and the condition of the property. The new buyer must accept these conditions as part of the auction. So each auction requires that you research the title.
Let me caution you. Most real estate people, investors and county employees have very little training when it comes to the subject of deeds. This is a red flag, and sometimes excitement about a hot deal will cause you to overlook this situation.
Title companies and attorneys that specialize in real estate are experts on the different types of property deeds. You should look to them for answers.
Tax defaulted property auctions are nothing more than a local government using its best efforts to recycle abandoned tax defaulted property and get the property from the default tax list to the honorable list of new taxpayers.
The county is unwilling to take responsibility for defects of the title or the condition of the property. Therefore, in most instances, the county issues a deed that’s considered a quitclaim deed.
The Quitclaim Property Deed Will Absolve the County of Responsibility
The county will transfer via a deed, and it will have the effect of a quitclaim deed. Quitclaim means the party signing it is not accepting any responsibility. They are not warrantying anything! Any problems with the property or the land will be the purchaser’s responsibility.
It is important to work closely with a title company. It is also important to understand the purchase you are making, and if you don’t understand, you need to employ an experienced attorney to explain the details.
Why You May Need a Quiet Title Action
To resell a tax-defaulted property more than likely will require a quiet title action. What does that mean? That means a specialist, an attorney, will complete the process of clearing the title, and the judge will sign off on that title.
Bottom line, you will need title insurance in order to sell tax defaulted properties.
Most purchasers will not buy without a quiet title action.
We hope you enjoyed Ted’s lesson, “Types of Property Deeds”
So what have we learned? We’ve learned that properties can be subdivided to help sell them. We also learned that the county is not accepting responsibility, however, they are selling used and abused properties. Also, we learned not to be afraid to do property research.
Boots on the ground are required to check the physical condition. Also, it’s important to learn how to research property records and talk to experts to learn what you don’t know.
If you’d like to know more about tax delinquent property investing, Ted Thomas provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, and personal coaching with certified coaches.
Learn how to reap huge rewards from tax lien and tax deed investing! Get started today by taking advantage of Ted’s Free Master Class! Act now, it costs you nothing and will give you a big head start!
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 or a title officer. Ted is an investor in tax defaulted real estate.