Expert: Dick Dennis - 4/22/2009

Question
how does a quit claim deed work? We have been renting our home for 13 months always paying on time to our landlord. we had an agreement to purchase the house after 2 years which 200.00 of our rent was going toward the downpayment. aprox 6 weeks ago the landlords mortgage company came to our door and said they were foreclosing on the house because they had not made payments for 6 months, we also found out they owe back taxes. the mortgage company is willing to do a quitclaim with us if we pay the back payments and their back taxes, if not the house goes on the courthouse steps on sat. we are willing to do this, I just hope we are doing the right thing as I have never heard of a quitclaim and really don't know how it works. we are just trusting the mortgage company since we don't want to move and don't have any time to check out any other options. we were also informed that the landlords are filing bankruptcy so I guess we are just out the money we paid to them. any advise and explanation will be appreciated. Thank you from Missouri

Answer
In any case, Terri, this is not sounding too good. But I should be able to make it so that you make out OK.

First of all, a quit-claim deed is when Mr. A, who owns a piece of real estate, signs over the title of a property to Ms. B. A title company can handle it for you at very little cost. However, a quit-claim deed does not guarantee that you will actually get the title! You would have to actually know and believe that Mr. A actually has title to the property. And what if there are other liens on the property? You would have to pay them, too, the way he was offering it to you. Not to mention the fact, he is giving you title BEFORE he even has title to the property. That is a scam!

For example, right now I can sign over the island on which the Statue of Liberty is located to you on a quit-claim deed. Perfectly legitimate. Or how about the Golden Gate Bridge? How about the Empire State Building? Yes, I can give you a quit-claim deed to any or all of those properties, if you like.

I am sure you get my point. If that Mr. A will give you the title to the property on a Warranty Deed (or Grant Deed in some states), and you do not give him any money until he actually does have title, then you can be assured you will indeed get the title to the property. The name tells you: it "warrants" that the grantor does indeed have title to the property and is conveying it to you, the grantee. The title company that handles that transaction searches the property's history to make sure.

Obviously, the owner with whom you had an "agreement to purchase the house after two years" was pulling your leg. Keep this in mind, Terri, in real estate, if it is not in writing, it was never said. Period. So, I am sure you do understand you do NOT have any kind of agreement to buy the property. Even if you do have it in writing, it isn't worth the paper it is written on.

To do this right, Terri, you have someone who is knowledgeable to look over your shoulder as you sign and pay the money. That someone should be a REAL ESTATE attorney. He/she will make sure you do wind up with that property. Yes, you are paying an attorney fee, but wouldn't you say it is worth it?

I do wish you well.

Dick Dennis
dixiedee13@aol.com