Should my client quitclaim her property to me in this short sale situatiuon?

I am doing my very first short sale. My client is 6 months in arrears and she still hasn’t received a foreclosure notice from the lenders attorney but she has received notice to vacate the premises by next week. I have told her that legally they cannot do that and she doenst need to worry. WE are trying to get her documentation together to submit the short sale package next week. I have heard that she should quitclaim her property to me but Im not to sure if I want this b/c i dont want to be liable for anything if the short sale doesnt go through. Any advice? Should i do the quitclaim?

In your own words…what do you believe that the Quit Claim Deed will do for you/her?


Is this a trick question…? Anyway I know that it will give me exclusive rights to her property and I know I will not be responsible for payments on her mortgage, but will i be liable for anything else? Why cant i just do the short sale w/o the quitclaim? I can just have her sign the sale and purchase contract and shw is lawfully tied to me and my investor correct?

In reality, a Quit Claim is very weak and could likely cloud the title…it does not transfer anything, it only “quits any claim” that she has to the property – it gives you exclusive rights to not much of anything. You might want to confer with a knowledgeable individual (like a lawyer or someone at the title company) before proceeding…


Sorry, I don’t want to be out of line, and correct an admin, however, “In reality, a Quit Claim is very weak and could likely cloud the title…it does not transfer anything, it only “quits any claim” that she has to the property --” is not true. (I suppose it could differ based on the state)
I’ll use my state as an example. Michigan.

If she Quit claims the property to you, you own any and all interest she MAY or may not have. If you know that she is the legal owner, and she executes a QCD to you, you ARE the owner. If the bank takes the house back, you lose your rights. In Michigan, if the foreclosure is already done, the homeowner has a 6 month redemption period. If she were to give you a QCD in that period, you would hold her redemption rights. If the bank ends up not taking the SS, and you don’t pay them off, to redeem, you lose your rights and they own the house, free from any interest from you or the homeowner. If you redeem the house, it is yours.

Hope that helps with your question, and clears up what exactly a QCD does.

Whatever you think…do as you please. But don’t come back a-posting when it all goes to Hell for you!

QCD are usually used to sever ownership (like between spouses) not to properly deed properties to a whole new entity… (please read the whole article!)

It takes just aboput the same amount of time and effort to do it correctly so why do it half-assed?

…and BTW, I am a Moderator of the site as a volunteer and that has absolutely no bearing on whether or not you should disagree or correct me.

DISCLAIMER: I am not a lawyer, don’t profess to be one, and do not play one on TV…your mileage may vary depending on your personal driving habits and conditions…


Well, TYPICALLY, mods are all-knowing, right? :stuck_out_tongue:

I agree that a QCD is typically used to sever joint tenancy, after divorces, and those things, and obviously, a Warranty Deed is better than a QCD. I am a Title Examiner by trade, and again, I know things vary greatly state to state in the real estate area. Here in Michigan, it conveys “any and all” interest a person may have. I’m not a lawyer though, and those guys can find a hole in anything anyway.

Quitclaim deeds are sometimes used for transfers between family members, gifts, or to eliminate clouds on title, or in other special or unusual circumstances. The grantee in a quitclaim deed (or a grant deed or warranty deed) receives no better title than what the grantor possessed. So if the owner holds fee simple title, she can deed, in any way, her rights. Warranty Deeds (or w/e in your state) typically get issued when the sale is completed w/ the title company. If there is no title company or insurance, its usually done via QCD. 'round here anyway. We insure property that has passed via QCD all the time, HOWEVER, we DO do our due diligence and check title back to a couple good Warranty Deeds, and/or 40 years. (marketable title time in Michigan)

My question to the original poster: WHY do a QCD? Why not jsut get a purchase contract, and work the short sale? If the bank is telling her she has to be out in X, are you SURE that she hasn’t already been foreclosed? Its easy to verify those things here, but in states that do Judicial Foreclosure, I’m not sure how it works. Here in Michigan, its very easily verifiable. Its advertised for a period of time, and then sold at auction to, usually, the bank. The HO then has 6 months from teh date of sale to redeem.

If you want to do a short sale you need to work with the lender. If you have the owner deed the property to you then try to negotiate with the lender/servicer you they will likely not be cooperative due to the unauthorized transfer of title.

And slondeau is probably right - your client has been foreclosed on and she is confused or not fessing up.

My client resides in Indiana and they are strictly judicial foreclosures. THE LENDER HAS NOT EVEN BEGAN THE FORECLOSURE PROCESS. I know this for a fact. They are trying to force her out illegaly. I still have not gotten a clear response and now Im even more confused than before! Does it cloud the title or doesn’t it? Should i quitclaim or do the warranty deed…or nothing at all and just get the purchase contract and move on with the short sale?

If given a choice between a Quit Claim and a Warranty Deed, obviously, choose a WD. You do not need to have her deed you the property though to be able to do the short sale. Get her under a purchase contract, have her sign an authorization to release information form, and attack the bank, from there. IMO.

is it true QCD does not raise property tax ?
what do u recommend as far as tranferring property with family members? should a QCD or a transfer deed be used and will this decision affect the title later during a refinance ?
why would an escrow officer use a transfer deed over a QCD ?

in my opinion the way I set these up is, a TRUST.

If you have an LLC or an S corp. assign them as benifeciary.
assign someone NOT related to you, That you can trust with your life.

This is so b/c it will allow your exit strategy to flow a little bit easier. Whoever is going to buy the property from you would obv. buy your interest in the trust. Thus avoiding a cloud in the tittle.


I think that you are really confused here. If your goal is to do a short sale, then have her sign a purchase contract subject to the bank accepting the short sale. Why play all these silly games with the deed? Quit claiming the deed into your name will not help you, but it could easily hurt you if it angers the bank.

Good Luck,