What does it mean to hold real estate in joint tenancy?

There are a multiple different ways to hold title to real estate. If you hold title to a parcel of property as joint tenants, when one joint owner dies the surviving owner receives the full interest in the real estate upon filing an affidavit of survivorship along with a death certificate with the county recorders’ office or registrar of titles as the case may be. 

Establishing title to the property with a co-owner as joint tenants avoids the necessity of establishing a probate to pass the property to the deceased individual’s beneficiaries.  Many times it is advantageous to hold title to property as joint tenants with your spouse if you are married or if you intend that the co-owner receive the property upon your death.

However, as there exist legal consequences to how you hold title to real estate, such as inadvertently circumventing the provisions of your will and estate plan, it is important to contact an attorney to fully discuss your options and your intended goals.

Feel free to contact an attorney from our office if you should have any questions as how to establish title to a parcel of real estate.

 

What is a quitclaim deed? Common questions and misconceptions about quitclaim deeds.

There are many common questions and misconceptions about quitclaim deeds. Many people mistakenly refer to a quitclaim as a “quick claim” deed. No matter how you say it, it is important to first
understand what exactly a quitclaim deed is, what it does and who the parties are to a quitclaim deed.

The parties to a quitclaim deed include a grantor and a grantee. A grantor is the one who conveys title to real property. A grantee is the one who receives title to real property.

What is a quitclaim deed and what does it do?

A quitclaim deed only transfers the interest a grantor actually possesses in the real property to the grantee. A quitclaim deed contains no warranties of title from the grantor to grantee. This means
that if a grantor does not own the property and provides the grantee a quitclaim deed to transfer the title to a parcel of real estate, the grantee receives nothing and has no legal action based upon the
representations and warranties contained in the quitclaim deed against the grantor.

What are some common misconceptions about quitclaim deeds?

Based upon the mistaken reference to a quitclaim deed as a “quick claim” deed, it is believed that a quitclaim deed is a fast and easy way to transfer title to property. In truth, it takes about the same amount of time to prepare a quitclaim deed as it does to prepare a warranty deed.

In addition, whether the grantee receives a quitclaim deed or a warranty deed, the title to the property is transferred upon delivery of the deed from the grantor to the grantee. It is extremely important that the grantee records the deed in the county recorders’ office or the registrar of titles office as soon as possible. Failure to timely record the deed, whether it is a quitclaim deed or a warranty deed may adversely affect the grantee’s ownership interest in the real estate.

Another misconception is that a grantee is unable to obtain title insurance if they receive title to the property by a quitclaim deed. To determine whether title to a property is insurable, a title company
will prepare a title commitment based upon a search of the county’s real estate records detailing any defects, liens and encumbrances that may exist against the title to a parcel of property. The existence
and extent of any such defects, liens and encumbrances determines the insurability of the title to the real estate, not the type of deed a grantee receives. Any time a grantee is purchasing real estate, the
grantee should obtain an owner’s policy of title insurance to protect their ownership interest.

It is also a common belief that by providing a quitclaim deed to a grantee, the grantor is released from their previous financial obligations and responsibilities under a mortgage. This is simply not correct.
Often this situation occurs when a couple divorces and one spouse conveys their interest to the other spouse by a quitclaim deed on a property that remains subject to a mortgage. The spouse conveying
their interest is not released from the obligations of the mortgage. The spouse acting as the grantor remains personally responsible for the mortgage obligation despite no longer having any interest in the property. In order to be released from the obligations of the mortgage the spouse receiving the property as grantee must refinance the property or the spouse acting as grantor must obtain a release
directly from the mortgage company.

When do you use a quitclaim deed?

Most commonly quitclaim deeds are used as a cost effective fix to correct boundary line problems and title defects. Quitclaim deeds are also used to convey a grantor’s interest in real estate to a grantee when the grantor and grantee were, prior to the conveyance, co-title owners in the property. Examples include creating a joint tenancy title arrangement between the property owners as well as terminating a former spouse’s interest in the property after a divorce.

No matter the type of deed a grantee receives to transfer title to property, a grantee should employ an attorney or title company to insure that (1) the proper deed is being used; (2) the deed is drafted properly; (3) the title to the real estate is clear from any defects, encumbrances and liens; and (4) the deed is being properly recorded.

 

Contract for Deeds

1.      What is a Contract for Deed?

In a contract for deed, unlike a mortgage, the owner or seller of the property finances the buyer's purchase instead of a lending institution. The buyer takes possession of the property immediately and agrees to pay the purchase price of the property in monthly installments. The seller holds the legal title to the property until the last payment is made and the contract is fulfilled. Upon full payment, the seller conveys title of the property to the buyer.  Should the buyer default, the seller can cancel the contract and take back the property.

2.      When should you use a Contract for Deed? What are the benefits?

A contract for deed can be used in place of a mortgage between private parties. As compared to a mortgage obtained through a lending institution, the terms of a contract for deed can be more freely negotiated between the buyer and seller.  There are additional benefits to using a contract for deed for both the seller and buyer. 

From a buyer’s prospective, a contract for deed can be used when a buyer may not qualify for a loan. A contract for deed is faster and less costly to finalize when compared to a mortgage from a lending institution.

Instead of paying a lender interest on a mortgage, the seller receives interest payments from the buyer.  A An additional advantage for a seller is that a contract for deed typically takes between 60 to 90 days to cancel and get the property back upon default as opposed to a mortgage that takes approximately 9 to 15 months to foreclose. Also, when opting for a contract for deed it may not be necessary to involve a realtor and pay a realtor’s commission.

However, although there are many benefits to using a contract for deed, there are also drawbacks that should be considered.  For example, if a buyer contracts for improvements to the property that remain unpaid, a mechanics’ lien can attach to the property.  In such a case, the mechanics’ lien is superior to the interest of the seller. This means that in order to maintain the seller’s interest in the property and avoid a mechanics’ lien foreclosure, the seller would be responsible to pay the unpaid charges.     

3.      How long does it take to do a Contract for Deed?

The process of preparing a contract for deed for review and signatures can be completed in just days.

4.      Do I need an attorney to do a Contract for Deed?

Although it is not necessary to retain an attorney, Minnesota law has many statutory and other legal requirements that must be complied with in a real estate transaction.  In addition, it is good practice to have an attorney make sure your legal interests are protected.