Deed of Trust

Archive for September, 2008

Many new real estate shoppers and investors hear loads of confusing jargon when they get started, and one term in particular has them scratching their heads more often then others, causing them to ask: What is a warranty deed?

The definition of warranty deed is a legal document that the seller (grantor) uses to guarantee that he or she holds a clear title to a piece of real estate and has a right to sell it to the buyer.

For instance, if you want to buy a house, (making you the buyer) then the best document for YOU to get on it would be the warranty deed. If you purchase a property with a Warranty deed on it, then you know that you will not have to pay for any little surprises that pop up after the sale, like city or mechanics liens that were tied to the property.

The Warranty deed is a safeguard for the BUYER. –But in the recent economy, it has become by far the most common deed to be used in property transactions.

It is important to note that the deeds guarantee is not just limited to the time the grantor owned the property, it extends all the way back to the origin of the property. So if a weed lien got misfiled for 80 years somehow and the county found it while updating their computer system, you as the new owner would not have to pay for it, because the previous owner guaranteed you a clear title.

Like all deeds, a warranty deed first and foremost establishes ownership and declares that the owner of the property has the right to sell it to you.

In the case of the previous owner's death, or inability to follow through on the warranty if title problems arise, then different states handle warranty deeds differently. In some the next of kin is sought to pay for the damages, and in most others, you, as the buyer, will simply be responsible for clear title when its comes time for you to sell it to the next owner.

Keep in mind that regardless of the type of Deed offered, a smart buyer will still perform a title search on any property, if for no other reason than the fact that the previous owner might not know about a lien. If you find any debts against the property, the seller has until closing to pay it off.

When you need a blank copy of a warranty deed, simply go down to your county courthouse and find the office that holds the property records. There is more than likely going to be a small paperwork fee, but that's just part of the cost of buying and selling real estate.

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Question: Does anyone know anything about deeds?

I am doing research on a house that I want to purchase. There was a Deed of Trust issued in which the buyer signed a promissory note for $100,000. Attached to this was a Warranty Deed with Vendor's Lien that was retained against the property for $25,000. Does anyone know what this means? Did the previous owner buy the house for $125,000, $100,000, $25,000 or some unknown amount but used this money as part of the payment towards the purchase? The initial offering price on the house is $130,000 but the house needs a lot of work. What do these liens mean to me as a potential buyer of the house? Would I be responsible for these? Are they common in Texas? All the websites say to research this information, but don't really tell what some of these details mean and what to do with the information. Thanks all who respond. I really appreciate you taking the time.

Answer: As the buyer of the property, paying off the current liens would NOT be your responsibility.

At close of escrow/title you will be given clear title and his loans will be paid off with the sale proceeds.

Just because his loans equal $125k doean't mean that's what he paid for it. It could have been a lot more and he had a large down payment. Was the $25K recorded at the same time, or at a later date?

But in all they should not worry you. As long as you are given clear title, meaning the property is free and clear of prior owner incumberances, you'll be ok

For added comfort, talk to the person handling the escrow (or escrow attorney depending on what's used in Tx) and they can give you reassurances as well.

Good luck

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