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Sanborn — Deeds, the good and the bad

Let's talk about deeds. There are good and bad deeds. First, a good deed is something that you might do to lend a hand to someone in need. You know, like helping that old lady across the street even though she hit you with her purse and yelled at you all the way over. A bad deed is something you might not be proud of or even illegal. That's when they say "the deed is done!"

In real estate there are also good deeds and some deeds that are not as good as others and you might want to know the difference. After all, the deed you receive when you buy a property is what describes your property and transfers the ownership or title to you. You might wanna read it!

The best kind of deed to get is what is called a Warranty Deed. This is not because you get a 5 year/50,000 mile warranty with the property! That would be nice of course, especially if it covered free maintenance and oil changes. A warranty deed does, however, give the buyer (called the grantee) the most extensive assurance of good title that is possible. A warranty deed comes with the implied promise that the seller (or the Grantor) has lawful title to the property and has the right to sell it. It also means that the property is being conveyed free of encumbrances (other than those stated in the deed) and that the seller warrants and will defend the grantee's title against all claims. The sellers, therefore, are providing a warranty.

Another common deed is called the Quitclaim. This type of deed offers just limited warranty for claims arising during the time of the grantor's ownership. It seems like we see these deeds used mostly between family members, in divorces, or between business partners. That has always seemed a little strange to me. We guarantee that the property is free of all encumbrances to a total stranger but not to a family member. That could make for a nasty Thanksgiving dinner someday.

Another kind of deed is the "fiduciary" deed. A "fiduciary" is a person that is appointed to handle the affairs of someone deceased or someone incapacitated by an extended major illness, dementia, or who is deemed "incompetent" by the courts. A fiduciary deed is used to sell a property on behalf of the owner. Obviously, if the owner has passed away or is incompetent, there is no warranty of title unless somehow the former owner has an internet connection and scanning capabilities on "the other side."

The foreclose deed, unfortunately, has been prevalent for the past few years as a result of all of the foreclosures. This deed is different than other deeds in that it is not a voluntary transfer of the real estate. It is a deed by which a lender takes title to the property away from the homeowner that failed to make his mortgage payments. While lenders must clear all known liens in order to resell the property, they just aren't going to warranty anything beyond the short time they were in possession of the property. Do you blame them? They will generally issue a Quitclaim Deed to transfer the property to a new owner.

If you are getting a loan to buy a property, the bank is going to require that you purchase what is called title insurance to cover their investment in your property. At the same time, you should strongly consider owner's title insurance as well. This is your extended warranty, so to speak. While it doesn't cover oil changes and brake pads, it does cover claims against your title due to things like errors and omission in deeds, fraud, forgery, undisclosed heirs, or improperly recorded documents. Title insurance is very affordable, is a onetime fee paid at closing, and is something I encourage all my clients to purchase. It may be the cheapest insurance policy you will ever buy....

As of June 1, 2014 there were 1,139 single family residential homes for sales in the Lakes Region in the twelve communities covered by this report. The average asking price was $581,412 and the median price point was $264,000. The median price point of $264,000 means that half the homes available were below that price and half were above. That means there are a lot of affordable homes out there! The inventory level has jumped up from the 973 available as of May 1 and but is lower than the 1190 on the market last June. The current inventory level represents a 13.5 month supply of homes on the market.

Please feel free to visit www.lakesregionhome.com to learn more about the Lakes Region real estate market and comment on this article and others. Data was compiled using the Northern New England Real Estate MLS System as of 6/1/14. Roy Sanborn is a realtor at Four Seasons Sotheby's International Realty and can be reached at 603-455-0335.

 
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