What's your Title?

DISCLOSURE:  I am not an attorney nor do I play one on television.

TODAY, I was checking up on a property that I have been monitoring as it is a bank repossessed home.  It didn't show up in the MLS because the contract came into place at the tailend of the listing by the developer/owner. 

What surprised me today was when I looked at the Deed, that threw me because there were other liens on this property.  The Bank issued a Quit Claim Deed.  This is basics in real estate 101 when getting your license and here's how the Quit Claim Deed performs for the new buyer:

• Some homeowners add someone on to title, it doesn't add them on to the mortgage, should one exist.
• The same holds true for divorce, while the spouse signs a Quit Claim Deed, it does not remove the spouse off the Mortgage or the Note to the home.
  
• There are no warranties when a Quit Claim Deed is issued.

So, should there be other liens on the property, would those liens be removed or can the creditor lienholder (not the current bank) come after the new owner for an outstanding bill?  This is where a good Attorney is needed and why a buyer needs to have one when purchasing a Chicago Home.

In a standard sale, usually a Warranty Deed is issued.
In a condominium sale, I have seen Special Warranty Deeds issued.
In an estate, I have seen Trustee's Deeds
In a foreclosure, I have seen Foreclosure Deeds
But this sale was a "Bank Owned Sale" and it wasn't classified as a Foreclosure.  It is how the bank takes title and how they will transfer. 

When especially entering into a contract with a Distressed property sale or even an Estate Sale, make sure that you have an agreement at the beginning in the contract on how the title is going to be conveyed to you, the new homeowner.  

Again, make sure you have a good Attorney that will watch out for your behalf as well as a good Realtor that understands the different types of Deeds to make sure it is understood at the time of contract and if altered during the attorney approval period, that you fully understand how that Deed will perform for you, whether it will protect you from any lienholders that may pop up after the close of the sale and that your title insurance will protect you.

Click here to read more about Real Estate Deeds and Title Insurance.

photo:  Filomena Scalise