Unrecorded quitclaim deed could benefit former homeowner

DEAR BOB: How can I find out the details of a quitclaim deedI signed in an attorney’s office in 1990? I found out recently it was neverrecorded. The attorney at whose office I signed the quitclaim has since retiredand I don’t remember his name. The quitclaim was for a property that belongedto a bank, which has since gone out of business. The property title is now heldby the city. What should I do next? –Andrea F.

DEAR ANDREA: A quitclaim deed conveys whatever title thegrantor owned in that property. But it provides no warranties or guarantees.Quitclaim deeds are often used in divorces where neither party wants to incurany liability or make any representations.

Purchase Bob Bruss reports online.

A quitclaim deed can convey full fee-simple absolute title,or it can convey nothing at all.

For example, suppose you pay me $1,000 for my quitclaim deedto the Empire State Building. You record that deed in New York City. However,you just got swindled because I don’t own any interest in that property or haveany potential contingent conflict.

Instead, suppose I give you a quitclaim deed to my home andyou record that deed. Now you own my home, which I own in fee-simple absolutetitle (subject to the mortgage and any unpaid property taxes or recordedliens).

That quitclaim deed you signed in 1990 conveyed whateverinterest you owned in the property. Presuming it was properly signed andnotarized, it transferred all your interest to the grantee, even if that personnever recorded it. Only a few states require recording of a deed for it to beeffective.

Your unasked question seems to be, “Do I still own anyinterest in the property since my quitclaim deed was never recorded?”

The best way to determine the answer is to pay a reputabletitle insurance company or title attorney to research the property title to see(1) did you ever own an interest in the property and (2) was it validlyconveyed by that unrecorded quitclaim deed to a subsequent owner forconsideration?

IS NEIGHBOR OR CONDO ASSOCIATION LIABLE FOR TOBACCO SMOKE?

DEAR BOB: I own a condominium where the smelly tobacco smokefrom the residents of the downstairs condo enters my upstairs unit and is sobad I have to sleep in my car at night. What recourse do I have? –Connie C.

DEAR CONNIE: I have received similar questions fromapartment and condo dwellers. You must be unusually sensitive to tobacco smell.

In the absence of CC&Rs (conditions, covenants andrestrictions) prohibiting smoking inside condo units (highly unusual), find outfor sure where the tobacco smoke originates and how it reaches your unit.

It is possible, if your building has a central heating andair conditioning system, that the smoke comes through the air ducts from adistant condo unit. A similar problem arises when a condo building has a commonexhaust system for kitchen or bathroom exhaust odors.

If the tobacco smoke comes into your unit through such methods,then the condo homeowner’s association is responsible to modify its common-areasystem so you don’t have to suffer odor from your neighbor’s unit.

After you have ruled out such sources of odor intrusion andare 100 percent certain the problem doesn’t involve common-area air transfer,then it is up to you to plug any air leaks between your unit and the downstairscondo. If you decide to file a lawsuit against the offender(s), be sure you canprove the facts and your actual damages.

ARBITRATION CAN’T BE FORCED IF YOU DON’T AGREE

DEAR BOB: We recently bought our first home. It was handledby a local Realtor who represented the sellers. Shortly after moving in, wediscovered the roof leaks around the skylights. Also, we learned from theneighbors the sellers had tried many times to fix those leaks. A reputablerenovation contractor says there is extensive damage and the only way tocorrect the problem is to remove the four skylights, repair the rotted lumber,and install new flashing. His cost estimate is $4,850. The written defectdisclosure provided to us by the seller before the closing said nothing aboutthe prior problems with the skylights and the seller’s apparent failures atattempting to eliminate the leaks. After our attorney contacted the listingagent and the seller, we were told any dispute about the sale must go tobinding arbitration. However, we did not sign the arbitration clause in thesales contract. Can arbitration be forced on us without consent? –Beth W.

DEAR BETH: No. Unless you signed a written contract thatprovides for binding arbitration, you can sue the home seller (and listingagent if you can prove that person knew of the alleged non-disclosed defect)for damages, presumably the $4,850 cost of repairs.

If you are a regular reader of this column, you know I donot recommend signing a binding arbitration clause in a home-purchase contract.When buying a home, that is no time to give up your legal rights if a disputelater arises to a jury trial, court procedures and rules of evidence, and theright to appeal.

If a dispute arises after the sale, as in your situation,the parties can then agree to binding arbitration to save time and money ifthey both agree to give up their rights. For more details, please consult yourattorney.

WHAT IF HOME SELLER IS UNREASONABLE?

DEAR BOB: We want to buy a home in a specific neighborhoodin a specific school district. Few four-bedroom homes come up for sale in thisarea, which would be ideal for our family of three children. When our buyer’sagent phoned us about this new listing, we immediately inspected it and made apurchase offer. The house is in terrible condition, but the asking price isbased on recent sales prices of similar nearby homes in tip-top condition. Theseller wouldn’t even counteroffer us. But the listing agent said “Bring afull price offer if you want to buy this house.” As we areAfrican-American trying to buy a home in a mostly Caucasian area, do you thinkthis is illegal racial discrimination? –Mark H.

DEAR MARK: No. Without more information, you simplyencountered an unreasonable home seller. Sellers don’t have to, and oftendon’t, make counteroffers.

If you really want to buy that house, it’s up to you to makeanother purchase offer.

WHAT IF RENTAL PROPERTY EXCHANGER TRADES DOWN?

DEAR BOB: You often explain that Starker exchange rule forrental property owners to avoid capital gains tax by trading up. But I want totrade down to sell my 10-unit apartment building for a less-expensive, luxurytwo-unit duplex where I will live in one unit as my residence. Will such a downtrade be taxable? –Eugene C.

DEAR EUGENE: To qualify for a tax-deferred exchange ofbusiness or investment property for another such property, Internal RevenueCode 1031 requires trading equal or up in both price and equity. In otherwords, you can’t take out any cash or net mortgage relief (called”boot”) without paying capital gain tax.

The number of rental units is immaterial. To illustrate, youcould trade from a $500,000 10-unit apartment building to a $1 million luxurytwo-unit duplex building and not owe any capital gain tax. However, all theunits must be rentals. Your personal residence unit cannot be involved withoutowing tax. Please consult your tax adviser before proceeding.

DEEDING CONDO TO GRANDAUGHTER WAS COSTLY ERROR

DEAR BOB: Shortly before my grandmother died, she deeded hercondo to me because she was living in an assisted-living center and had noplans to return to her condo. She died about three weeks later. However, Ididn’t record the deed before her death. It turns out her will left the condoto her son (my uncle) who is now claiming it under the will. It is worth around$450,000 although grandmother only paid about $76,000 many years ago. Do I havea valid claim to the condo title? – Nancy R.

DEAR NANCY: Shame on you for not promptly recording yourdeed. If you had done so, you would clearly own the condo today.

Instead, your uncle can argue that because you failed torecord the deed before your grandmother’s death, it was not delivered unconditionallyso he inherits it under the will.

Also, because your grandmother deeded her condo to youbefore death, if your deed is determined by the probate court to prevail overthe will provision, your adjusted cost basis will be grandmother’s low $76,000adjusted cost basis rather than today’s $450,000 market value. My best adviceis hire a super-sharp probate attorney.

The new Robert Bruss special report, “Probate PropertyProfit Secrets Revealed,” is now available for $5 from Robert Bruss, 251Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instantInternet delivery at www.BobBruss.com.Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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