Buying a Quit Claim Title property

[Account Closed]

Hi everyone I recently found someone who wants to sell a house but they won't offer a warranty deed. They only offer a quit claim deed. What would be the risk of me buying a property like that? From what info I found, it appears that the property went trough foreclosure in March this year. The company that is selling the house bought it as a package deal and they want to make a small profit and sell it as it is. (That's what they say) Let me know your advice: should I buy it or not? If i would buy it, it would be a rental place. So I'm not planning on selling it after I fix it up. Thank you

[Bill Gulley]

Generally, a sales transaction should never be done using a quit claim deed or similar, these deeds are primarily used between related parties, not unrelated parties, ie, H&W, business partner, you and your Trust. 

I said generally because there are title issues and a seller's interest will not be covered in your title policy, such as unrecorded liens that pop up 6 months later from something the seller did. 

The exception to never is from an insured institutional lender, that's because a title company can insure over their holding period due to coverage and regulatory requirements on that institution. 

A private company may or may not be insurable depending on the title company's risk assessment providing coverage and how that company is insured. If it's just an individually owned company that unties bundles to spin off, they may not, if they are an insured loan servicing company they may cover their acquisition and holding period. 

Before you leap, get a preliminary title insurance search and opinion as to coverage. A title attorney's opinion won't do you much good without coverage. 

Buying from any individual on a QCD is never the right thing to do! :)