TAKING TITLE GARRETT SUTTON
A noticeable break in the chain of title means that the buyer–even though they believe they are the rightful
owner–can be subject to the possible claims of others contesting the title. It can also mean that the property is
now very difficult to sell, because future potential purchasers don’t want any doubts about clear title.
Accordingly, title insurance is important. Before insuring you against the risk of future claimants, a title company
is going to check the public records to see if there are any troubling gaps in the chain of title. If gaps exist they
won’t issue a title insurance policy. If they won’t issue a policy you won’t buy the property. It is that simple.
Follow their lead.
Transferring Title
The specter of title insurance affects the way you will transfer title to property. There are two ways to transfer
title:
1.
A Grant Deed. This deed (or ‘Warranty Deed’) implies or warrants that:
a.
The Grantor (the person granting the property) has not transferred the property before, and that
absolute ownership (‘free and clear’ title) is conveyed.
b.
Unless the Grantee (the person receiving the property) agrees otherwise, the property is free from
any liens or encumbrances against it.
c.
Any after-acquired title (ownership that goes to a Grantor later) is also conveyed to the Grantee.
What is offensive is the lengths
that some of these lenders will
go to get you to bite on a quit
claim deed
2.
A Quit Claim. This much weaker deed only:
a.
Transfers whatever present right, title or interest the transferor may have. (If the transferor doesn’t
have any rights, neither do you.)
b.
No warranties are made as to any liens or encumbrances. (So if there are undisclosed mortgages
against the property it’s not the transferor’s problem–as it is in a grant deed. Instead, it is now your
problem.)
c.
No after acquired title is transferred.