For our students who are deep into researching tax deed or tax lien properties, they will often stumble across what is generally referred to as a property transfer history.
A property transfer history is exactly what it sounds like. You can see record of who the previous owners of a property were, how much they acquired the property for, and what kind of deed they received.
There are many kinds of deeds, however today I will describe one whose implications are very relevant to tax lien and tax deed investors.
This deed is called a quitclaim deed. This is used to transfer a grantor’s (seller) interest in a property to a grantee (buyer). It does not guarantee that the title of the property isn’t clouded, meaning that other parties could have an interest in the property. Other interests include liens and encumbrances.
Quit claim deeds are often used when transferring a property to another family member, or to the owner’s very own entity. This is because there is no warranty or guarantee that the grantee has actually received free and clear interest in the property and will not be challenged later. It is rarely used in a formal property sale due to the lack of warranty.
This is important to note not only for your own research, but also because many counties will use a quitclaim deed at their tax deed auctions to transfer the deed to the winning bidder. Counties will use other names, such as ‘Sheriff’s deed’ rather than quitclaim. They cannot provide any warranties, as the county possesses the property by force of law, not by title. The county itself has no interest in the property, and does not guarantee that no liens or encumbrances are clouding the title.
This of course leads to the importance of quieting a title after purchasing a tax deed property at an auction. For more information on quieting a title, stay tuned for my next article!