Quit Claim Deeds are a large part of many investor’s tax sale businesses. In this video we explain exactly what a tax deed investor needs to know about quit claim deeds.
Transcript:
Hey there! Casey Denman here with TaxSaleAcademy.com. In this video, we’re talking about Quit Claim Deeds and what you should know as a tax sale investor.
First and foremost, pay attention to the word here. It is a “Quit” Claim Deed. QUIT. It is not a “Quick” Claim Deed. There’s nothing fast about it. So when you refer to it, make sure you refer to it in the proper context. It’s a Quit Claim Deed, QUIT.
Now, a deed by definition, is an instrument that transfers property from a seller to a buyer. It’s typically recorded in public records and acts to inform the public that a property has been transferred from one person to the next. I guess it could be compared to a car title, if you will. A Quit Claim Deed is a specific type of deed where the seller doesn’t warrant the chain of title, but instead, is selling you whatever ownership they have, if any.
Now, this can be compared to a Warranty Deed in contrast. A Warranty Deed, a seller sells a piece of property and they say, “I warrant that I’m the owner of this property and that the title is free and clear.” Whereas a Quit Claim Deed, they’re basically selling you whatever ownership they have on a property, if any.
Now, there’s a rumor and a story and kind of a myth, if you will, floating around out there that says, “I can deed you the Empire State Building. I can give you a Quit Claim Deed and basically sell you the Empire State Building.”
Well, I guess technically by definition, this could be true, but it doesn’t typically work like this. If I go to the Recorder’s Office in the New York County and I try to sell somebody the Empire State Building, the Recorder is going to bounce that deed back to me because they oftentimes do look at the legal descriptions. If the legal description says “Empire State Building,” they’re going to say, “Well, as a matter of fact, you don’t own the Empire State Building so correct this legal – whatever issue there is or whatever typo – and then send it back to us.”
I have had this happen in the past where I’ve had a typo that I have put into a deed or a clerk has put into a Quit Claim Deed, and the Recorder or the Register of Deeds often will send it back to me for correction. I correct it and then I send it back. So they do look at the legal descriptions and they will reject the deeds.
And secondly and most importantly, if I represent that I own the Empire State Building, I advertise it for sale, I sign a contract saying that I’m going to sell you the Empire State Building, I accept your money as if I’m the owner of the Empire State Building and I record a Quit Claim Deed as if I’m the owner of the Empire State Building selling it to you, well, if I don’t actually own that building, it’s called fraud. Not only could this land me in a lawsuit, it could also land me in prison.
Now, as a tax sale investor, there’s two main reasons that you need to know about tax sale investments using Quit Claim Deeds. The first one is a lot of times, you’ll receive a Quit Claim Deed from an auction company. Some states use Tax Deeds. Other states use Quit Claim Deeds which acts in the same format as a Tax Deed. It basically says the county is selling you whatever ownership they acquired through tax foreclosure for this property. So there’s your first reason.
And the second reason is a lot of times as a tax sale investor, you can use a Quit Claim Deed to sell your properties. It’s a very fast way. That way, you don’t have to worry about title insurance or clearing any title clouds that happened to come up when they did the tax foreclosure process, especially the lower volume, lower dollar amount transactions. If you’re selling something for $50,000 or $100,000, more than likely, you’ll have to use a warranty. Then you’ll have to take the time to get title insurance. But if we’re talking $1,000 or $2,000, anything below $5,000 or $10,000, oftentimes, a buyer will accept a Quit Claim Deed because the property is being sold at such a deep discount that they can deal with any title issues.
So, that’s all you need to know as a tax sale investor about Quit Claim Deeds. For more information on the very lucrative tax sale investing business, head on over to my website at TaxSaleAcademy.com, which you can do by clicking the blue link right here next to my head. Again, it will take you to TaxSaleAcademy.com. Once you get there, download your free copy of my e-book, The Tax Sale Blueprint, and you’ll be on your way to a very successful tax sale investing career.
Take care, folks! Bye-bye.