advertisement

Trust can be changed to remove condominium

Q. A few years ago, my husband and I set up a trust and living will. Included in the trust are two pieces of real estate. One is our primary residence and the other is a condo we purchased so our daughter and granddaughter could reside there after her divorce. She has been paying us the amount of the mortgage that is in our names.

Now we would like to do a quick-deed to our daughter. Does the trust have to be changed or the condo removed from the trust? Will we have to hire an attorney to accomplish this?

A. The trust does not need to be changed. You or an attorney will prepare a Trustees Deed, conveying the condo from the trust to your daughter. This will remove the condo from the trust.

I suggest having an attorney prepare the deed as in the event the deed is not prepared properly, the conveyance will not occur. Unfortunately, a common occurrence in real estate is property owners prepare their own documents, only to learn much later that what they attempted to accomplish failed to occur because of a defect in the deed or the recording. Even worse is the party that was to benefit from the conveyance learns after the death of the granter that the conveyance was improper, often making it impossible to correct.

The deed you refer to is called a quitclaim deed. This type of deed conveys whatever interest a granter has in a property to a grantee. It does not, however, guaranty or "warrant" that the granter has an interest in the property being conveyed or that the grantee is actually obtaining an interest in the property. Accordingly, one should never accept a quitclaim deed in a typical property conveyance. Quitclaim deeds are typically used when related parties transfer an interest to one another or property is being transferred between parties who already have an interest in a property.

Q. We purchased a property from a bank and obtained a special warranty deed. In all our other purchases, we received a warranty deed. What's the difference?

A. A warranty deed, which is utilized in the vast majority of arms-length real estate transactions, warrants to the purchaser that the granter owns the property, has the right to convey the property and that no title conditions exist that would impair the purchaser's use or ownership of the property. A special warranty deed provides that the granter warrants only that granter has not created or suffered any defect in title to occur during the period that the granter was in title to the property being transferred.

What's the difference? Say Dennis owns a home that he purchased in 2010 from Danielle. It turns out, though, that in 2008 Danielle forged a deed, putting the property in her name. Then she sold to Dennis.

Now, Dennis sells the property to Sharon and utilizes a special warranty deed. Six months after Sharon purchases the property, Dillon knocks on Sharon's door and tells her he owns the property and she should remove herself from the premises. As Dennis only warranted to Sharon that he did not cause any title defects, Sharon would have no recourse against Dennis.

In the event a general warranty deed was used in the Dennis-Sharon transaction, Sharon would have a cause of action against Dennis for his breach of the warranty he made to her regarding his ownership.

As a practical matter, this is not generally an issue as in virtually every real estate transaction, the grantee is protected through a title insurance policy. So, even if Sharon could not pursue Dennis, she would likely have a claim with her title insurer.

• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to tdr100@hotmail.com or call (847) 359-8983.

Article Comments
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the "flag" link in the lower-right corner of the comment box. To find our more, read our FAQ.