Special warranty, quit claim deeds have key differences
Question: My brother and I inherited a lot in Show Low from our mother 10 years ago. Since that time I have paid the property taxes, and I have paid for a retaining wall after significant flooding on the lot one summer. Last year my brother said that I can sell the lot and keep the sale proceeds. He then sent me a quit claim deed to the lot which I have recorded. I found a buyer and we are in escrow, but the title company is refusing to accept my brother’s quit claim deed. The title company is requiring that my brother sign a special warranty deed. If my brother’s quit claim deed states that he has no interest in the lot, why does the title company want a special warranty deed?
Answer: A quit claim deed is not a conveyance deed of real property, and has none of the warranties of title contained in a special warranty deed. A quit claim deed only states that the signer of the quit claim deed has no interest in the real property. Title companies want a special warranty deed from any seller of real property for two reasons. First, although the title company may have liability to the buyer, the seller of a home warranting “clear” title is also liable to the buyer for any title defect, e.g., incorrect legal description. Second, if the title company has to pay a claim for a title defect because of the seller’s warranty of title, the title company can demand that the seller reimburse the title company for this payment.