Beware surprises a quitclaim can bring
Dear Mr. Feichthaler:
I am nearing the end of my lease of the home I live in, and the owner has suggested I accept a quitclaim deed from him for $200,000 cash. The house is worth at least $220,000, so I feel I am getting a great deal. How do I go about buying the property — just give him the money and get a deed from him?
— Stan M.
I have conducted many transactions where a tenant decides to purchase the property from the owner at the end of a lease. This can work well for everyone because the tenant is already in place and won’t need to move, and the owner doesn’t need to market the property for a different buyer or new tenant. However, caution needs to be exercised before handing anyone money, especially that amount of money.
I recommend that a formal contract be prepared and signed by you and the owner detailing all aspects of the transaction. Such items in-clude the closing date, who is paying for the title work and closing fees and, most importantly, that the seller is obligated to provide you clear title. The problem with a quitclaim deed is that it only provides to you what the grantor has, no more. If your owner has the property with a $200,000 mortgage attached, then your deal is no longer looking as enticing as it did initially, because that mortgage will not disappear unless it is paid off at closing. By having a formal contract and requiring title work done by a law firm or title company, you will know that you are receiving good title, and that all liens on the property, such as mortgages and back taxes, will be paid at closing.
Also, any funds paid toward the purchase of the property, including escrow deposits, should be held by the law firm or title company, not the seller. The contract should detail this as well.
Assuming that the property is lien free, or that the seller can provide clear title at closing, you will avoid the surprises that a quitclaim deed can bring, none of which are pleasant surprises when the occur. I wish you and your family a very Happy Thanksgiving Weekend.
Eric P. Feichthaler has lived in Cape Coral for over 33 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Historical Museum, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 20 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator.
Mr. Feichthaler can be reached at email@example.com, or (239) 542-4733.
This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.