Why use quit claim instead of warranty deed to transfer to LLC?
Investor · SC · Member since 2021 · 5 posts · 0 votes
Why use quit claim instead of warranty deed to transfer to LLC?
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Quote from @Erin Wamsley:
Quote from @John Underwood:
QC deeds are easier and I just type them up myself.
Using one doesn't diminish the underlying GW deed.
I guess my question is: What exactly makes a QC deed easier? Amount of paperwork?/Need for an attorney?/Not having to document any title research?
Erin
Nothing.
A QCD will include all other legal requirements for a deed, but without any warranty. If it doesn’t, it’s defective.
To me when I see a quitclaim deed in the chain it just makes me curious about the grantor’s title… also whether the instrument was properly prepared and is valid. That said in some jurisdictions they use QCDs for all transfers.
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I wanted to do a quit claim deed in a similar situation and my attorney told me exactly what you said "Why bother with a quit claim deed when you can issue a warranty deed?" . I was under the impression a quit claim deed would be cheaper that's why i wanted to do it to begin with.
- 2yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
QC deeds are easier and I just type them up myself.
Using one doesn't diminish the underlying GW deed.
- Investor · SC · Member since 2021 · 5 posts · 0 votes2y
Quote from @John Underwood:
QC deeds are easier and I just type them up myself.
Using one doesn't diminish the underlying GW deed.
I guess my question is: What exactly makes a QC deed easier? Amount of paperwork?/Need for an attorney?/Not having to document any title research?
Erin
- 2yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
You do not have to lookup and reference how the person selling the property got their deed. Derivation section.
I can and have created my own General warranty deeds too. Lots of times I have to move fast to aquire the really great deals. I can find out about a property and own it in 3 or 4 hours.
A QC deed is just commonly used to move a property into an entity where you are the owner of both.
- Member since 2024 · 7 posts · 4 votes2y
I just qcd'd a property to an LLC. An attorney drew it up and ran the paperwork for $125 plus filing fee.
the ownership of the original deed and the llc is the same so the llc becomes an assignee on the title insurance (the original policy carries over) I confirmed with the title agency.
so, a quit claim IMO is perfectly fine way to transfer the ownership into my own llc.
Quote from @Erin Wamsley:
Quote from @John Underwood:
QC deeds are easier and I just type them up myself.
Using one doesn't diminish the underlying GW deed.
I guess my question is: What exactly makes a QC deed easier? Amount of paperwork?/Need for an attorney?/Not having to document any title research?
Erin
Nothing.
A QCD will include all other legal requirements for a deed, but without any warranty. If it doesn’t, it’s defective.
To me when I see a quitclaim deed in the chain it just makes me curious about the grantor’s title… also whether the instrument was properly prepared and is valid. That said in some jurisdictions they use QCDs for all transfers.
Gimer Law516 Reviews- 2yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
Quote from @Tom Gimer:
Quote from @Erin Wamsley:
Quote from @John Underwood:
QC deeds are easier and I just type them up myself.
Using one doesn't diminish the underlying GW deed.
I guess my question is: What exactly makes a QC deed easier? Amount of paperwork?/Need for an attorney?/Not having to document any title research?
Erin
Nothing.
A QCD will include all other legal requirements for a deed, but without any warranty. If it doesn’t, it’s defective.
To me when I see a quitclaim deed in the chain it just makes me curious about the grantor’s title… also whether the instrument was properly prepared and is valid. That said in some jurisdictions they use QCDs for all transfers.
Don't know if SC is different but a QCD in SC does not require the derivation section to show the previous owner and where their deed was recorded.
I was recording a QCD 2 weeks ago and the Register of deed clerk told me she couldn't file this without the derivation section (that is required on a General warranty deed or a special warranty deed).
I showed her that this was a QCD and she pretty much said "my bad" that I was correct and recorded it.
I can give you a QCD to the Golden Gate Bridge with no burden of proof that I own any of it, but if I don't own any of it you got nothing.
Quote from @John Underwood:
Quote from @Tom Gimer:
Quote from @Erin Wamsley:
Quote from @John Underwood:
QC deeds are easier and I just type them up myself.
Using one doesn't diminish the underlying GW deed.
I guess my question is: What exactly makes a QC deed easier? Amount of paperwork?/Need for an attorney?/Not having to document any title research?
Erin
Nothing.
A QCD will include all other legal requirements for a deed, but without any warranty. If it doesn’t, it’s defective.
To me when I see a quitclaim deed in the chain it just makes me curious about the grantor’s title… also whether the instrument was properly prepared and is valid. That said in some jurisdictions they use QCDs for all transfers.
Don't know if SC is different but a QCD in SC does not require the derivation section to show the previous owner and where their deed was recorded.
I was recording a QCD 2 weeks ago and the Register of deed clerk told me she couldn't file this without the derivation section (that is required on a General warranty deed or a special warranty deed).
I showed her that this was a QCD and she pretty much said "my bad" that I was correct and recorded it.
I can give you a QCD to the Golden Gate Bridge with no burden of proof that I own any of it, but if I don't own any of it you got nothing.
I guess it depends upon the jurisdiction but clerks perform a clerical, not legal, function. Accept payments, record documents, and maintain the database please.
Most states aren't so picky. For example: any deed containing the names of the grantor and grantee, a description of the property sufficient to identify it with reasonable certainty, and the interest or estate intended to be granted, is sufficient, if executed, acknowledged, and, where required, recorded. These are MD requirements.
Notice no being/derivation clause is required by law... but anybody who regularly prepares deeds includes them as they assist with researching title. If you look closer at SC law they're not a legal requirement. The failure to include a derivation clause in a warranty deed does not invalidate it because the statute requiring it is regulatory in nature. SC Code 30-5-35(c). A clerk should accept any reasonable excuse and record the instrument.Gimer Law516 Reviews- Rental Property Investor · New Braunfels, TX · Member since 2022 · 409 posts · 408 votes2yWe did a quit claim deed on a rental property last year from our personal name into an LLC here in Texas that we wanted to take a DSCR loan on and the lender made us go back and use a warranty deed before they would close on the loan. No more quit claim deeds for me.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes2y
Every state is a littkle different, but basically the key difference lies in the level of protection offered to the buyer regarding the title and any potential claims against the property. A quitclaim deed provides minimal protection, while a warranty deed offers more comprehensive assurances.
A quitclaim deed transfers whatever interest the grantor (seller) may have in the property to the grantee (buyer). It offers the least protection to the buyer because the grantor does not guarantee that they have clear title to the property. It is commonly used in situations where the parties know each other well and trust each other, such as transferring property within a family or between divorcing spouses or to transfer a property into an LLC.
A warranty deed provides the highest level of protection to the buyer because the grantor warrants that they have clear title to the property and that they have the right to sell it. It guarantees that there are no outstanding liens or encumbrances on the property, except those disclosed in the deed. If any issues arise with the title after the sale, the grantor is legally obligated to compensate the buyer for any losses incurred.
Warranty deeds are commonly used in traditional real estate transactions. If you buy an off market deal definitly use a WD and not a QCD.
Not sure how any other state works (actually not legally sure the details in NJ... :) ), but the issue to me is Title Insurance.
investors do a quit claim deed just because its "easier" and avoids having to purchase new Title Insurance --- I thought you were "supposed" to with a warranty deed. My issue with this is potentially invalidating your Title Insurance. While you may be comfortable that you are receiving a clean Title, you now no longer have insurance about the chain of Title prior to your ownership.
Additionally, if the Title Insurance becomes invalidated (which is possible since you no longer have an insurable interest, a fundamental characteristic in insurance) then you should be in breach your loan convenant to have Title insurance is my understanding. Of course, you should be getting a commercial loan anyway when moving your property into a LLC to protect its corporate veil and keep "clean." I still haven't found an investor who actually tries to properly handle the mortgage payments w/o co-mingling.
Hope my viewpoint helps. Happy to chat. Good luck.
- Attorney · Columbus, OH · Member since 2023 · 6 posts · 7 votes2y
Quote from @John Underwood:
QC deeds are easier and I just type them up myself.
Using one doesn't diminish the underlying GW deed.
This is completely wrong... the quit claim deed in the chain of title completely breaks all warranties that run with the property via the previously recorded warranty deed. Warranty deeds are paramount... quit claim deeds are good for clearing title issues and/or if you are unsure of the status of a grantor's title. Even on lot splits... I cannot recommend to my clients enough... WARRANTY DEEDS
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