Question

Read the following scenario and answer the question in 5 sentences at least.You have started a successful business and are now ready to buy some property as your storefront location. You find one piece of property on a prime corner lot downtown. The owner of that property is willing to sell it to you with a quitclaim deed. The property has been in his family for multiple generations and he is not sure if any cousins have a legitimate claim to the property. You find another piece of property of similar size that is in a slightly less ideal location, but the owner is willing to sell it to you with a warranty deed. Based on your knowledge of the types of deeds, briefly discuss the risks involved in buying each property, which one might cost you more, and who has the burden of cost if a claim comes against the title of the property after the purchase.

Answer 1

Answer:

A quitclaim deed is actually very risky in this case. The alleged owner will sell you the property but if anyone else (the cousins maybe) makes any claim on the property and their claim is valid, then you will have to pay them money. In this case it is a gamble really, if the cousins do not make any claim, then you got a great deal, but if the cousins make a valid then you lost a lot of money. Is it really worth it? I doubt it. When a deal is to good to be true, it is actually not a good deal at all.

On the other hand, a warranty deed will provide you protection against any possible claim from any third party, including cousins, any other type of relative, mortgages, delinquent taxes, etc. A warranty deed protects the buyer and any possible future claim must be settled by the seller.