QuitClaim Deed form husband to wife

[Account Closed]

Does anyone know of any concerns to look for if a spouse has transferred interest to a spouse via a quitclaim deed?  I saw a video that warned of this transaction.  It suggest the grantor could still have interest.  Almost like they gave equitable title, but retained legal title.  I would just like to know if there is any red flags to look for in this type of transfer.  I would like to assume if they did still have an interest the law firm would put them on notice of a foreclosure proceeding and said interest would be lost by way of the foreclosure.

Thanks.

[Bill Gulley]

First, I understand why you're trying to check title, just understand while you think you might be doing a title search, you're not, you're not running the abstract of title, and there are many issues that have been unmentioned here. Here is just one:

A couple gets a divorce, the wife gets the house and the husband is to pay her X dollars as part of the divorce settlement. This can only be found by reading the dissolution of marriage ordered by the court.

Husband coneys title by quit claim deed. Fine, the uses of that deed is proper in most jurisdictions, Texas does have some odd title carve out in title insurance, like not insuring mineral rights, but, whatever.

You check and you see it was a divorce. 99.9% of novice examiners don't read the decree.

Then the wife gets behind, the husband is still on the note, they go to foreclosure.

There is a prior lien! It's a judgment by the divorce court against the husband to pay x dollars, the decree is prior to the QCD and becomes a general lien ordered by a court.

You need a satisfaction of lien from the wife to clear that lien!

Another issue, a QCD grants equitable and legal title held, at the time the deed is granted. If the parties are still married, the next day, the grantor still has a marital interest and gains an equitable interest in the assets owned by the spouse and a legal standing upon the death of the spouse to legal title, depending on the distribution of the estate under state law. Just as Matthew pointed out, these tactics are used by amateurish credit dodgers, the transfer is a sham and the interests can be taken back or "clawed back". 

Another matter missed, a court appointed administrator, for an adult, executing a QCD does not squash the claims of an incapacitated adult with heirs existing at the time the court finds the adult unable to act for themselves under state laws. So, who executed that deed and when the deed was made has a bearing on future title claims. There are situations where one may not waive or grant all of their rights.

At a foreclosure sale, my last issue is with title, that's because most title matters can be cleared up personally or, if needed, by partition of interests or by finding that claims of creditors are not pursued in a timely manner, or that statutory limitations apply and releases of liens were not filed properly. Simply take that into account in your bid price, if it's a great deal, title matters can be worked out. 

Seems like the OP is passing on properties that don't appear to have clean title and in reality, he can't determine if title is insurable. If you're really concerned, have a title company issue a title commitment prior to the sale, repeat customers can get it for free, others might pay $50 if you can't buy it. There is no reason for investors to play abstract attorney. :)