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Hello, I would love some insight into this real estate situation in Maine. I'm coming from New York where things are not the same, so I find the thing a bit confusing.
I was looking at buying a house and readying to make a purchase offer, only to find the house has a "Quitclaim with Covenant" deed and not a general warranty deed. It was apparently bought by the current owners at a tax sale or foreclosure.
The Maine real estate lawyer I'm talking to thinks that title insurance is still possible to get with this property although there are many articles on the internet saying you cannot get title insurance with a quitclaim deed.
My other concern is, I imagine we wouldn't be able to sell the house normally later on even if we got title insurance since we would still have only a "quitclaim with convenant," unless this situation is very different in Maine. Here in NY, it seems like realtors will not list houses with a quitclaim deed and lenders will not give a mortgage on one.
In this case the seller cannot give us a warranty deed because he only has a quitclaim having bought it from the SBA. It sounds perhaps like your seller was able to give you a warranty deed because he held one -- a good move. The remedy to a quitclaim here is a quiet title action, which runs $3000-4000 in addition to the cost of title insurance.
Title insurance is available. A proper title search yielding the right results, and quiet title action (if warranted) can allow the conveyance of a Warranty Deed it one wanted to convert. The title insurance may have an exclusion or two around whatever caused the Quitclaim, but those revolve around rights in property in foreclosure and/or property tax issues, notice, etc. Notice the nuances in definitions under the Maine Statutes. You can figure it out, but it's often clear as mud:
§763. WARRANTY DEED
A deed in substance following the form entitled "Warranty Deed" shall when duly executed have the
force and effect of a deed in fee simple to the grantee, his heirs and assigns, his and their use and behoof
forever, with covenants on the part of the grantor, for himself, with the grantee, his heirs and assigns, that,
at the time of the delivery of such deed, he was lawfully seized in fee of the premises, that they were free of
all encumbrances, that he had good right to sell and convey the same to the grantee to hold as aforesaid, and
that he and his heirs shall and will warrant and defend the same to the grantee, his heirs and assigns forever,
against the lawful claims and demands of all persons. [1967, c. 377, (NEW).]
SECTION HISTORY
1967, c. 377, (NEW).
§764. WARRANTY COVENANTS
In a conveyance of real estate the words "warranty covenants" shall have the full force, meaning and
effect of the following words: "The grantor covenants with the said grantee, his heirs and assigns that he is
lawfully seized in fee of the premises, that they are free of all encumbrances, that he had good right to sell and
convey the same to the said grantee to hold as aforesaid, and that he and his heirs shall and will warrant and
defend the same to the said grantee, his heirs and assigns forever, against the lawful claims and demands of all
persons." [1967, c. 377, (NEW).]
SECTION HISTORY
1967, c. 377, (NEW).MRS Title 33, Chapter 12: SHORT FORM DEEDS ACT
| 4 §766. Quitclaim covenant or limited covenant
Generated
12.4.2013
§765. QUITCLAIM DEED WITH COVENANT
A deed in substance following the form entitled "Quitclaim Deed With Covenant" shall when duly
executed have the force and effect of a deed in fee simple to the grantee, his heirs and assigns forever, with
covenant on the part of the grantor, for himself, with the grantee, his heirs and assigns forever, that at the time
of the delivery of such deed the grantor covenants with the grantee, his heirs and assigns, that he will warrant
and forever defend the premises to the said grantee, his heirs and assigns forever, against the lawful claims
and demands of all persons claiming by, through or under him. [1967, c. 377, (NEW).
I just saw your question.. I hope you have resolved your problem. If not, I suggest that you get the seller to furnish a survey, and you could make the offer dependent on the result of that... not one by an unlicensed party who offers to find boundaries, for example, one by a licensed surveyor. If the survey meets with your approval, you could pay for it, or not. Write this into your offer.
How long ago did the tax sale occur? If it was a long time ago, be very very careful.
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