Bulletin: FL000024

Date:
May 05, 1993
To:
All Florida Offices and Agents
RE:
Quit Claim Deeds

Dear Associates:

A quit claim deed is not a proper means of conveyance of property. A quit claim deed does not convey property but merely purports to convey whatever interest the grantor may have, if any. It is hypothetical.

Because of the hypothetical nature of a quit claim deed, it obviously carries with it no warranties of title whatsoever. This is extremely important because if we insure a quit claim deed and it develops that there are problems in the title, we are not able to follow the chain of warranties back to the source of the problem. The chain of warranties ended with the quit claim deed.

If the quit claim deed appears in the back chain, that same problem exists. We can only tract the warranties back to the quit claim deed.

I often hear reasons offered for the use of a quit claim deed such as, "that's all they were willing to give" or " the grantor was a family member". These are not reasons for insuring a quit claim deed. If that is all they are willing to give, then we decline to give insurance. If it is a family member, I want to know why you would give a warranty deed to a stranger but give a family member only a deed without warranties and without even a representation of ownership.

We have, in fact, had claims where the issue was the use of a quit claim deed and the lack of warranties. In some cases we have lost money; in others we have saved money.

There is another major problem with quit claim deeds, the problem being that the doctrine of after acquired property is not applicable with the use of a quit claim deed. The result is that an attempt to cure a problem in the back chain by obtaining a supplemental deed from a third party will be unsuccessful when the title purportedly conveyed was by quit claim deed.

There will be occasions where there is a potential error under an estate or some possible interest because of a deed of questionable origin conveyed to a disinterested party. A deed may be needed in a dissolution of marriage. A quit claim deed may be needed to release a possible homestead interest. We can all think of other instances where a person may or may not have an interest in property. These represent proper uses of a quit claim deed.

The danger of accepting a quit claim deed was made exceedingly clear in a 1992 District Court of Appeals case, Florida East Coast Railway Company v. John Robert Patterson, et al. In that case, the railroad gave a quit claim deed. It did not have any title. The man who thought he bought that tract from the railroad lost a quiet title suit because the railroad did not have title. He was not able to get his money back from the railroad because they had not made any representations or warranties as to the quality of the title. Therefore, he lost both the land and his money. When an attorney objects to our refusing to insure quit claim deeds, as happens, from time to time, feel free to present him with a copy of this case. A copy of is available from your local Stewart Title Guaranty underwriter.

Accordingly, do not insure a quit claim deed not insure over a quit claim deed in the back chain of title without the specific approval of Harold Hickman, myself, or Houston Legal Department.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
4.16 Deeds Of Conveyance
Exceptions Manual:
None
Forms:
None