Title insurance unneeded with quitclaim deed in hand Housing Counsel

Title insurance unneeded with quitclaim deed in hand

Q: My mom passed away this year. She left her condo to my sister and me. The mortgage has been paid off for over 10 years. The only expenses are the condo fees and taxes.

I am the executor of her estate and need to change the name on the title to myself and my sister.

In the county where the property is located, there is a quitclaim deed. Several lawyers have recommended I get title insurance in addition to the quitclaim deed." They said, "If you are going to sell the condo, you will save time and money, if there are any liens on the property." They say it will cost more money at the time of the closing to get a clean title.

Is that true? Do I need to get title insurance now? Or can I just get a quitclaim deed."

A: To my knowledge, a quitclaim deed is used throughout the country; it is not exclusive to your state or county.

Oversimplified, there are several kinds of deeds: (1) general warranty - whereby the grantor (the giver of the deed) gives the grantee representations and warranties that title is good, going back in history. Title insurance, if obtained, will back up that guarantee; (2) special warranty - in some states this deed tells the grantee "I guarantee and warrant that from the day I took title, it is good; and (3) quitclaim - whatever title or interest I have in the property, I grant to you; I warrant nothing and I guarantee nothing.

Lawyers often joke and say, "I will give you a quitclaim deed to the Washington Monument."

Typically, such a quitclaim deed is between friends and relatives, where title searches are not necessary. For example, if a couple is divorcing, one party will grant such a deed to the spouse who will remain in the house with the kids.

So to answer your questions, yes, a quitclaim deed would be appropriate.

Do you need title insurance? I see no need for it. Your mom owned the property for a number of years, and to your knowledge there were no legal or title problems. More important, you went through probate. If there were creditors who could file liens against the property, they had to do it within the time frame required by your probate laws. I assume there were no creditor claims.

Bottom line: If and when you go to sell the condo, your buyer will obtain a clean title search. In my opinion, you don't need title insurance in this situation.

Let me make it clear. I'm not saying "don't ever get title insurance." When you buy a condo or house, there are good reasons for obtaining such a policy. For example, in recent years people have bought property from "sellers" who don't own the real estate; or not all of the property owners have signed the deed; or there are tax liens on the property that the title attorney missed.

If you are buying real estate, your lender will insist on obtaining a "lender's title policy," which, typically, you will pay. You have the right to decide whether you want to get owner's coverage, which will protect you in the event of a title problem.

If you are in doubt, ask your attorney. Keep in mind that the lawyer will probably get a commission for selling such insurance, but he/she should still provide you with an honest opinion. When in doubt, ask an attorney who is not involved in the transaction and who will not be tainted by the perception of a conflict of interest.

Incidentally, you indicated that you only have to pay the condo fees and the real estate tax. I strongly recommend that you obtain insurance coverage for problems that may occur in your unit. This is different from the Master Insurance policy that your condo association carries and is referred to as an "HO-6" policy.

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Benny L. Kass

Housing Counsel