Buying a home with a Quit Claim deed

[smalltown2]

What is the name of your state (only U.S. law)? Maine

I came close to making a cash purchase offer on a house in Maine only to find out that the owner only holds a quit claim deed because he bought it at a tax sale or foreclosure. The situation now gets very confusing.

The real estate agent involved suggests asking seller for a "quit claim with convenant" which seems to be specific to Maine.

The Maine attorney involved says that we can get title insurance on this quit claimed property although a lot of "internet information" suggests otherwise.

It seems to me that even if we are able to buy title insurance, we then have a property that will be very hard to sell later on unless we file a quiet title action which the Maine attorney says will cost an additional $3000-4000. It seems like otherwise, no lenders would want to touch this, making it unavailable to anyone but cash buyers willing to hold an unwarranted deed.

Are my concerns correct here? Does "quit claim with covenant" buy us anything substantial in Maine compared to a quit claim?

 

[justalayman]

765. Quitclaim deed with covenant

A deed in substance following the form entitled "Quitclaim Deed With Covenant" shall when duly executed have the force and effect of a deed in fee simple to the grantee, his heirs and assigns forever, with covenant on the part of the grantor, for himself, with the grantee, his heirs and assigns forever, that at the time of the delivery of such deed the grantor covenants with the grantee, his heirs and assigns, that he will warrant and forever defend the premises to the said grantee, his heirs and assigns forever, against the lawful claims and demands of all persons claiming by, through or under him. [1967, c. 377,

I'm not familiar with the Maine law but what is stated sounds like a warranty deed is in other states.

while he might provide a QC deed with covenant, he may not


contact a title insurance company and ask them just what you asked here. A title insurance company may have no problem issuing a policy regardless of the QC deed. They research, or are supposed to, the title anyway.

 

[FlyingRon]

Unless you are the grantee, whether there's a warranty on a historical deed or not is largely immaterial. If there's a defect in the deed you are potentially screwed whether that deed had a warranty or not. The grantor is probably long gone and didn't make any representations to you.

The key is a proper title search backed up with owner's title insurance. A lender wouldn't loan without the search and a policy to protect their interest. I wouldn't pay cash or even accept a gift of property without one to protect my interests.

 

[latigo]

What is the name of your state (only U.S. law)? Maine

I came close to making a cash purchase offer on a house in Maine only to find out that the owner only holds a quit claim deed because he bought it at a tax sale or foreclosure (?) . The situation now gets very confusing.

The real estate agent involved suggests asking seller for a "quit claim with convenant" which seems to be specific to Maine.

The Maine attorney involved says that we can get title insurance on this quit claimed property although a lot of "internet information" suggests otherwise.

It seems to me that even if we are able to buy title insurance, we then have a property that will be very hard to sell later on unless we file a quiet title action which the Maine attorney says will cost an additional $3000-4000. It seems like otherwise, no lenders would want to touch this, making it unavailable to anyone but cash buyers willing to hold an unwarranted deed.

Are my concerns correct here? Does "quit claim with covenant" buy us anything substantial in Maine compared to a quit claim?

Something seems to be amiss here.

If it is true that the purported owner of the property purchased it at a tax sale, he would not be "holding a quit claim deed"!

Furthermore, if the individual was the highest bidder at a sale of the property by a tax collector he would not be in possession of the tax collector's deed until two years following the date of the sale. [*]

That two year period being the time allowed within which the then existing recorded owner or owners of the property can redeem the property.

And it would not be unheard of nor improper for the purchaser at a tax sale to transfer over his purchase rights by quitclaim deed prior to the expiration of the two year period of redemption.

On the other hand it would be imprudent on the part of such a purchaser to at any time to convey that interest other than by quitclaim deed.

I don't, but your local attorney should know just what warranties of title, if any, accompany a tax collector's deed. But I'm reasonably confident that if the said individual is in possession of any deed issued by a tax collector it is not a QUITCLAIM DEED.

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[*] Maine Statutes Title 36: TAXATION Part 2: PROPERTY TAXES Chapter 105: CITIES AND TOWNS Subchapter 9: DELINQUENT TAXES Article 5: SALE OF REAL ESTATE