Can owner QuitClaim Deed property to me?

Question

Husband and spouse bought property together. Spouse and husband divorced. Husband died. Spouse is still on deed and mortgage. Mortgage is/was with Argent Mortgage Company which is long gone. Spouse really wants nothing to do with the property. Can I offer her a few bucks to quitclaim deed the property to my corporation or to a trust and take ownership? I understand that there is no warranty on title but wouldnt it be a good way to take control of the property from an investors standpoint? The property is distressed but in a fairly good neighborhood. What is my exposure in this situation?

Don Konipol · Answer

Anyone can sell a property they hold an interest in to anyone else.  With a quit claim deed they are selling you whatever interest they have in the property.  The liens on the property stay with the property, of course.  You are not personally liable for the existing liens; however, the lender will sometimes report the loan to a credit reporting agency to be shown on your credit report.  This assumes that the lender finds out you now have ownership of the property.  Also, any liability arising out of ownership from the time you own the property is for your account.  So, if the day after you purchase the property someone slips and breaks their neck, you will be sued personally as owner of the property.  I bring this up because often on these quit claim sales the buyer  does not want to spring for a causalty insurance policy.

Most of the personal liability issues can be  eliminated by taking title in the name of a LLC or corporation, or your dead beat no asset brother in law!

It's rare for a mortgage to just "disappear" because the lender is out of business. The loan is an asset that would  be sold by the trustee or liquidator when the original lender is "going out of business".  These loans are often sold to private investment funds in packages.  You may be able to negotiate a substantial discount for a cash payoff.

In any case it sounds like you will have a moderate to large amount of legal work to do to perfect title so that it is insurable.  A title insurance company would be able to tell you what would be required to make the title marketable.

Andy D. · Answer

A Quit Claim deed from the wife would only release HER interest in the property.  It would not release the interest that the mortgage holder has in the property.

Argent's mortgages are still being serviced, mostly by AHMSI.  If they have not yet foreclosed and decide to, your interest in the property won't even be a speed bump for them.  It doesn't affect their ability to foreclose at all.  They will do a title search as part of the foreclosure process and when they see a deed that shows you have an interest in the property, they will name you in the foreclosure action just like they name every other lienholder or person with an interest in the property.   You may be able to negotiate a payoff for less than the full balance, but you don't really have any leverage.  A wise foreclosure attorney would negotiate a settlement that would net his client the same amount that the lender would receive if they completed the foreclosure.  You have no ability to stop the foreclosure, so you are at their mercy.

I agree with all of the above advice.  A title search is the place to start with this one.  There could be a whole stack of liens and judgments filed against this property and they don't go away when you acquire the property by Quit Claim.  They still have to be paid.  But if you get the property at the right price, it could still be a great deal despite all of this.

Good luck with it.

John McNamara · Answer

The bank wouldn't deal with you at all.  The bank deals with whoever holds the mortgage, not the deed.  It's like a subject 2 deal.  If the deal ever goes down the toilet, the bank will deal with the owner of the loan, not the deed holder. I know you said the mortgage company isn't known, but like Jon said, someone owns the loan.

Michael G. · Answer

OK. So I'm hearing a lot of caveat emptor responses. I may just pass on it. It may not be worth the headache. Thanks.

Jon Holdman · Answer

Someone still owns that mortgage, even if you can't figure out who it is.  They still have a security interest in it, and can still foreclose if they choose to.  If there's some value there, they will eventually foreclose.

Somewhere the seller has paperwork from whoever holds the mortgage.  May have been lost in the death, but someone owns this mortgage.

If you're lucky, you can look on like and figure out how the deed is held.  Otherwise, contact the county and do a search.  Not 100% reliable, but probably accurate in this case.  If it was held jointly, his half would have transferred per his deed.  There's a good likelihood that's to the wife.

Unknown heirs and an unknown mortgage.  Get the quit claim if you wish, but take care before you sink any money into this.

Michael G. · Answer

Thanks Jon. I guess what I'm trying to determine is whether this is a play or not? I give the wife say $500 to qcc it to a entity. If the lender comes forward and wants to foreclose now they have to deal with me and the entity. I would imagine it would put me in a stronger bargaining position. I would be a better position to short sale it. What is my downside? They foreclose against the LLC? Should I pursue it or leave it alone?

Michael G. · Answer

@peter -  My attorney said the same thing. He said to check and see how title was held because the estate may own part of that property. I asked him if I need to pull title and he said no, just get a copy of the last deed that was recorded.

@ john - The wife hasn't made a payment in like forever and moved to another state. The property is vacant and distressed. The lender, Argent Mortgage Company is long gone. The mortgage is with who now? Do you know? I dont. I cant determine who now has the mortgage. Who do I call to figure out what the pay-off is or send the ATRI to?

Peter Walther · Answer

If they were divorced before he died they were probably tenants in common with his heirs inheriting his half.  Taking a deed from her only gets you her share.  Make sure you understand what you are getting.

John McNamara · Answer

Cashboy:

You can definitely Quit Claim this property to your LLC or corp.  This is a classic Subject 2 existing financing scenario which I've done.  You're saying the mortgage is "gone" which can't be the case.  I know you're going by what she said so you need to pay for a title search (couple hundred bucks) and see who has interest in the property.  If you plan on taking ownership of the property, your responsible and open to anything from day one (except for the loan).  The loan is still the wifes responsibility.

Run a title search, get copies from the wife of all original paperwork, then "assume" the mortgage and pay the bank each month from the tenants rental payment. Better yet, lease option the property out (assuming there might be some equity). :cool:

Can owner QuitClaim Deed property to me?

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