Warranty Deed - YouTube

Hi Lee Phillips here.

I want to talk for just a minute about a concept called warranty deeds.

Basically you have two types of deeds

you have quit claim deeds

and you have warranty deeds

and we've got another YouTube on quit claim deeds

you quit claiming your interest in the property

whatever that is

you might not even have an interest but you can make out a quit claim deed.

On the other hand a warranty deed says that you're gonna make certain promises or the

seller is going to make certain promises to the buyer

the seller is what we call the grantor

the buyer is what we call the grantee.

So you're gonna make--if you're the seller you're gonna make certain promises to the buyer.

You're going to promise to the buyer or guarantee or warrant

to the buyer

that you have the actual title

to the property

it's seasoned in you you have both a

equitable title and the legal title

you promise or you warrant

that you have the right to transfer that or to convey that

to the buyer

and then you're also going to make some warranties in the future

you're gonna promise the buyer

the grantee

that he has the right to quietly enjoy the property

peacefully enjoy it

you're gonna give him an assurance

that if there is any claim or anybody files a claim

against the title

or says that they had a title to it

that he's going to defend you

the seller will defend the buyer in that case

he's going to make further assurances

that he's going to take proactive steps

in order to protect your right to that quiet title

or to the peaceful enjoyment of the property.

Big deal, huh?

Well it is a big deal,

If you're the buyer you would like a warranty deed.

We don't really worry as much about warranty deeds now

as we used to in the past

because the guy's warrant

his guarantee, his promise

is only as deep as the guy is.

If he declares bankruptcy

the warranty's gone.

If he doesn't have any money

he's "judgment proof"

well how you gonna go back and get a warrant from him

or how you gonna get his guarantee

how is he going to defend you in court if somebody else makes the claim to the title?

What we do now is we get title insurance

or we have title searches

and we have professional people, companies

that go in and they will search the title

and they will tell you if there are any outstanding liens

or problems associated with the title and

then they will sell you an insurance policy

it's a big industry

and I think my wife is the only one that's ever actually collected on a title insurance policy

kind of complex thing

but we bought a condo unit

and it had been through--the whole complex had been through bankruptcy and blah blah blah

couple years after we were actually living in the condo

all of a sudden we get a tax bill

for a bunch of years back

and it was a valid tax bill

and the title insurance got to pay our tax bill

so we get title insurance now.

The warranty deed isn't as important to us

because we have a big insurance company standing behind us

instead of the warranty

the guarantee of the seller

He's probably a flake anyway.

You do want to keep that title insurance going however.

Here's where you're going to want a warranty deed.

Lots of real estate investors

are putting their investment properties

into limited liability companies

or S corporations, family limited partnerships,

you're probably going to use an LLC and we've got other YouTubes on that sort of stuff

but when you transfer that title from you

to the LLC or to the

corporation or partnership or whatever it is

if you use a quit claim deed

you are only transferring your interest

in that property.

You have no warrant

going along with the property

and basically at that point the title insurance falls off so speak

whereas if you use a warranty deed

that warranty and the title insurance

will transfer over and be available to still cover the title

when it goes to the LLC

or to the entity

that you want to hold that investment property.

Now if you're just moving your property back and forth

to your living revocable trust

your living revocable trust--the one you use for estate planning

is just you

and that's like moving it from one pocket to the other pocket.

You still have the title insurance and everything else

you don't need to make warranties to yourself

so use a quitclaim deed in that case

but remember these entities

the LLC corporation partnership whatever it is

these entities are not you

they are legal entities

people

that are separate from you

so you need to warrant

that insurance in that title

is a good title

and it goes along with it

if you use the warranty deed.

This is Lee Phillips talking about warranty deeds.