[quote=Bluefin]We are planning to buy a condo from a REO. The Bank only offers a Quit Claim Deed with warranties as followings: a) seller has not conveyed the property or any interest therein to any person other than buyer; and b) the property is free from any encumbrances made by seller or any person claiming under seller. Is there any problem with this kind of deed instead of grand deed? Do we have problems to sell the property in future?
thanks in advance for your inputs[/quote]
Bluefin, I may have not made myself very clear. While the “warranties” seller is making to you are poorly written, the emphasized phrase is worrisome. The are several types of liens your “REO seller” could be “junior” to. These liens would have claims over seller, which would pass to any new buyer who accepted a quitclaim deed. This could be the case if your REO lender foreclosed on a 2nd or subsequent TD on the property.
If this is the case, in order to convey the property to you on a grant deed, seller would have to sell the property to you for enough money to retire these liens before close of escrow (COE). They could be tax liens, HOA liens, govm’t liens, judgment liens or trust deeds. If lender cannot practically sell the property for enough money on the open market today to do retire these lien(s), then they should rent the property out until they can (since they already own it).
Most defaulted-upon lenders in a subordinate position do not even attempt to foreclose on or bid on a property at a trustee’s sale that they have an interest in unless they know they can get most or all of the money they lent on it back out in a subsequent sale.
I stand by my previous advice to insist on your approval of the preliminary title report as a contingency on your offer to purchase. If, prior to you even placing an offer, seller is adamant that he/she cannot convey the property to you at COE on a grant deed, ask the listing agent why. Perhaps you won’t even want to place an offer after learning the reason or “non-reason” given to you.
