TAKING TITLE GARRETT SUTTON
While often advocated by promoters as the easiest
to the property. It doesn’t, because neither you nor
means for transfer, the quit claim deed is not your
the bank really knows what those rights are.
best choice. First, know that in many bank involved
REO (real estate owned) transactions the REO
lender selling a foreclosed property will only use a
Quit Claim deed.
Why is this?
It is because the lender has no idea what
happened on the property prior to foreclosure.
During the boom, documents were not properly
kept or transferred, the banking industry’s MERS
electronic recording system failed to keep up with it
all, and many documents were just plain lost. This
is no way to maintain a good chain of title on the
nation’s real estate. It was so bad that in 2009, a
large national title company announced it would no
longer issue title policies to two large national
banks. These lenders’ records were just not
trustworthy, and the title company was not going to
To further get themselves off the hook after taking
take the risk. Know that for years to come there
your money for the property, these banks will bury
are going to be title issues arising from the real
the fact that they don’t warrant good title in an
estate collapse in 2008.
Addendum at the end of a sixty page contract.
They want you to waive any rights you may have in
It is for this reason that sellers (mainly banks) of
the matter. They may or may not know that the title
foreclosure properties are using quit claim deeds.
is so defective that the property will be severely
They don’t know what happened and they aren’t
devalued. But they want you to release them from
about to warrant or guarantee that they have a
any future problems and sign off that everything is
clean title to convey to you. The quit claim deed
okay. There have been reported cases where the
they use instead says, “We don’t know what we’ve
Addendum is intentionally withheld and only
got but whatever we’ve got we’re giving to you.”
provided to you at the closing. (You know, at that
last meeting at the title office where you are
What is offensive is the lengths that some of these
expected to sign 47 documents without reading
lenders will go to get you to bite on a quit claim
them.) Accordingly, please be very careful and
deed. They will tell you that it grants you full rights
have your own attorney review such transactions.