In this interview, Ted Thomas answers the question, “What is a quitclaim deed?” and explains how this is applicable to tax delinquent property investors.
You may watch the video above, or if you prefer, read the transcript below.
In “What is a quitclaim deed?” the topics we’ll be discussing are:
- Using a Quitclaim Deed in Real Estate
- Transferring Deed of Property at a Tax Sale
- Quiet Title vs Quit Claim Deed
- Learn More About Buying Tax Deed Properties
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Using a Quitclaim Deed in Real Estate
What is a quitclaim deed? It’s a legal instrument used to transfer ownership of real estate. However, it’s very different from a warranty deed. A warranty deed warrants that there is nothing wrong with the condition of the property or the title. While a quitclaim deed offers no such guarantees.
When a seller issues a quitclaim deed, the seller is walking away and claiming no responsibility for any issues with the property or the title. All the responsibility for defects in the title or property become the responsibility of the buyer. A quitclaim deed offers no benefit to the buyer, only to the seller.
If you wanted to sell a property and completely wash your hands of it, you could sell it with a quitclaim deed which works more or less the same in all the states.
Transferring Deed of Property at a Tax Sale
What is a quitclaim deed to a tax defaulted property investor? The county doesn’t know everything about the properties they sell. Therefore, to avoid liability, tax deed property will be transferred to the winning bidder by the county via a quitclaim deed.
They may call it a “sheriff’s deed” or a “treasurer’s deed” or any other name, but it will function as a quitclaim deed. The county will claim no responsibility for the state of the property or the title when they sell it to you.
You are responsible for doing your due diligence before purchasing real estate at a tax sale. Much of the research can be done online. However, you will want to physically go out and view the property or have someone you trust do it for you.
Quiet Title vs Quit Claim Deed
What if you don’t want to sell the property with a quitclaim deed? Is there a way to get a clear title on the property you purchased at the tax sale? Yes, there is a process to do that called a “quiet title action.”
Quieting the title is not something you can do yourself. A quiet title action is a legal process that requires you to hire an experienced attorney and can cost $2,000 to $3,000.
When you purchase tax delinquent real estate, you’ll want to take this cost into account before you bid on a property.
Learn More About Buying Tax Deed Properties
If you want to learn more about investing in tax defaulted real estate, view more of Ted’s free videos.
Ted is the authority on the subject of tax lien and tax deed investing and has been teaching students how to buy and sell tax delinquent properties for over 25 years.
If you want to have a free auction list of tax defaulted properties that are currently for sale, go to TedThomas.com/freegift.
We hope you enjoyed, “What is a quitclaim deed?”
A quitclaim deed is a way to transfer ownership of property. However, buyer beware. All the benefits of using a quitclaim deed go to the seller. It relieves the seller of all responsibilities regarding the condition of the title and property.
The buyer becomes responsible for everything, including that the title is clear, which could entail a legal process called a “quiet title action.”
When counties auction tax defaulted properties, they will very likely transfer the property to the buyer using a quitclaim deed. The county will deny any responsibility, so buyers must do their due diligence on properties before bidding.
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Read the Video Transcript:
What’s a Quitclaim Deed?
Randy: Ted, I’ve learned a lot from our conversations here making these videos for folks to watch. In case you didn’t know, this is Ted Thomas, the authority on tax lien certificates and tax deeds. Here’s something you haven’t told me about, Ted, and I’m interested to hear. What is a quitclaim deed, and who benefits? Is this something the buyer does or the seller? What is a quitclaim deed?
Ted: Wow, you’re really getting sophisticated. We’re at the advanced level.
Randy: What the heck is one of those? What is a quitclaim deed and how does it work?
Ted: A quitclaim deed, wow.
Randy: Yeah, what is a quitclaim deed?
Ted: Well, let me preface everything folks. I’m an author, a publisher, an investor. I buy and sell tax liens, and I make my living doing this. I’m not an attorney, I’m not a CPA, I’m not a broker. So I’m not giving you legal advice. A quitclaim deed is something you need to pay attention to. It’s not quick claim. It’s not quick, like fast. It’s quit. In other words, stop, quit.
Ted (cont’d): When you buy something from the county, the county actually confiscated and seized that property from someone else. They really don’t know anything about the property. So they’re going to sell it to you, and they might use a treasurer’s deed. They might use a Sheriff’s deed, or they might use a foreclosure deed. I don’t know what kind. Or they might just say, we’re going to give you a quitclaim deed, but all of those will say in the content, if you read the narrative, that it’s a quitclaim deed.
Ted (cont’d): A quitclaim means the seller is quitting and claiming that they have no responsibility for anything on that property. In other words, all the responsibility goes to you, the buyer. You say, whoa, wait a minute. Now this is not regular real estate. For regular real estate, you go down and get an attorney, or you get the title company, and you exchange warranty deeds.
Ted (cont’d): So the seller is warranting that there’s nothing wrong. They’re warranting that the well water is okay, that there are no liens. They’re warranting a lot of things, and if they can’t warranty it, you get title insurance. It’s very complex to get a property closed.
Ted (cont’d): We go to auctions, and we’re buying them as fast as that. See how fast I’m clapping my hands? I can’t go fast enough. They’re selling those properties that fast because they quitclaim every one of them. If you’ve got a claim, if there’s something wrong with that property, it’s your baby. So you learn to do your due diligence, and that’s what we teach you.
Ted (cont’d): First you walk there; you’ve got boots on the ground. Oh, it doesn’t look like the roof is very good. We’ve got to fix the garage door. Oh, it needs paint. Well, I don’t know what’s inside, and you won’t know what’s inside either. So don’t overbid. When the county transfers the property to you, they’re saying, “We’re giving you a quitclaim. Stop. Quit. We’re not taking any responsibility.” Nobody else is going to tell you this.
Ted (cont’d): That means that you’re going to have to get a clear title on that property. Is there a process to do that? There is. We have to have an attorney do that, but it costs you a few thousand dollars. We’re experts on that, and we’re expert at teaching you where to go, but not to do it. We’re not attorneys. We’re not any of that, but we’ll teach you what to do so you don’t get in trouble.
Ted (cont’d): If you want to sell a property, and you don’t want to have any responsibility, you sell it with a quitclaim deed. So the county, the government, sells to you with that quitclaim. There is no benefit to you when you’re a buyer of getting a quitclaim deed, but anybody that wants to get rid of responsibility, they say, “We’re going to give you a quitclaim deed.”
Ted (cont’d): Now this is really advanced stuff for some basic lessons that we’re doing today. So whoever came up with that question has already been studying, I can tell you that. It’s usually about the fourth month of class when people start asking this kind of question.
Randy: What is a quitclaim deed from state to state? Is it different from state to state how quitclaim works?
Ted: No, the quitclaim is the same in all the states. The laws do have nuances in each state, and that’s why you always have to read the rules. Each one of those is a little different government, but the quitclaim, that’s pretty universal. I’ve never seen a property be transferred from the county or from the government in any other way. The government will take no responsibility. They will require you to have responsibility, but they take no responsibility when they sell it.
Ted (cont’d): That can turn into a real advantage if you know what you’re doing, and we’re going to teach you how to do that. If you know what to do, you’ll buy with that quitclaim deed, but you’ll have thought about it ahead of time. You’ll have adjusted your price. You won’t bid the price up. You’ll say, “Well look, I’m going to need $2,000 or $3,000 to have an attorney check all that paperwork and make sure everything’s okay.” So it’s not something unusual, but it’s a very sophisticated question. The first time anybody’s ever asked me that.
Randy: Well, I’m a sophisticated guy. I mean come on.
Ted: I can tell.
Randy: Thanks for answering, what is a quitclaim deed? I never heard of that term before, so I appreciate getting the insight. I hope you did too. Hey and Ted, if they want to learn more, they can always head to Tedthomas.com/freegift. Ted, what is that free about? Why don’t you tell them?
Ted: When you go to Tedthomas.com/freegift, the free means we’re not only going to give you lots of free videos to watch and learn more, a lot more than we can get into here, but also you can get a free auction list. So request that. You might want to make a request to the county that you’re in and see if they have the auction list available.
Ted (cont’d): Now, we only can get what the county will give us. So you might have to get one from another place, but at least you get to see what an auction list is like, and it gives a lot of information. A lot. It will tell you the value of the property, if there’s any mortgage on the property.
Ted (cont’d): They tell you that property number, so you can look it up. Every property has a number. It’s called an assessor’s parcel number. That number is the same as your social security. There’s only one like it in the whole state. So you put that in, and you can see the property. You can see a lot. They don’t always have pictures. They have all the data on the property.
Randy: So that auction list, you can learn a lot by looking at it. And I’ll tell you what, if you take one of the classes with Ted, you’re going to learn what to do with that information to make it work for you.
Ted: Yes, once you have that information, you’re good. You’re way ahead. Most of the auction buyers don’t have a clue what an auction list is. They have no idea. They just go there and they hope and pray that they’re going to get a property. That’s not a good business strategy. It’s not, I’ll guarantee you.
Randy: Head there right now, Tedthomas.com/freegift. You’ll see a lot more videos just like this one. You’ll get to know Ted. You’ll get to know a little bit more about investing in this area, and I think you’re going to enjoy what you see. Hey Ted, thanks for sharing with us again.
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.