DEAR BOB: How can I find out the details of a quitclaim deed I signed in an attorney’s office in 1990? I found out recently it was never recorded. The attorney at whose office I signed the quitclaim has since retired and I don’t remember his name. The quitclaim was for a property that belonged to a bank, which has since gone out of business. The property title is now held by the city. What should I do next? –Andrea F.
DEAR ANDREA: A quitclaim deed conveys whatever title the grantor owned in that property. But it provides no warranties or guarantees. Quitclaim deeds are often used in divorces where neither party wants to incur any liability or make any representations.
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A quitclaim deed can convey full fee-simple absolute title, or it can convey nothing at all.
For example, suppose you pay me $1,000 for my quitclaim deed to the Empire State Building. You record that deed in New York City. However, you just got swindled because I don’t own any interest in that property or have any potential contingent conflict.
Instead, suppose I give you a quitclaim deed to my home and you record that deed. Now you own my home, which I own in fee-simple absolute title (subject to the mortgage and any unpaid property taxes or recorded liens).
That quitclaim deed you signed in 1990 conveyed whatever interest you owned in the property. Presuming it was properly signed and notarized, it transferred all your interest to the grantee, even if that person never recorded it. Only a few states require recording of a deed for it to be effective.
Your unasked question seems to be, “Do I still own any interest in the property since my quitclaim deed was never recorded?”
The best way to determine the answer is to pay a reputable title insurance company or title attorney to research the property title to see (1) did you ever own an interest in the property and (2) was it validly conveyed by that unrecorded quitclaim deed to a subsequent owner for consideration?
IS NEIGHBOR OR CONDO ASSOCIATION LIABLE FOR TOBACCO SMOKE?
DEAR BOB: I own a condominium where the smelly tobacco smoke from the residents of the downstairs condo enters my upstairs unit and is so bad I have to sleep in my car at night. What recourse do I have? –Connie C.
DEAR CONNIE: I have received similar questions from apartment and condo dwellers. You must be unusually sensitive to tobacco smell.
In the absence of CC&Rs (conditions, covenants and restrictions) prohibiting smoking inside condo units (highly unusual), find out for sure where the tobacco smoke originates and how it reaches your unit.
It is possible, if your building has a central heating and air conditioning system, that the smoke comes through the air ducts from a distant condo unit. A similar problem arises when a condo building has a common exhaust system for kitchen or bathroom exhaust odors.
If the tobacco smoke comes into your unit through such methods, then the condo homeowner’s association is responsible to modify its common-area system so you don’t have to suffer odor from your neighbor’s unit.
After you have ruled out such sources of odor intrusion and are 100 percent certain the problem doesn’t involve common-area air transfer, then it is up to you to plug any air leaks between your unit and the downstairs condo. If you decide to file a lawsuit against the offender(s), be sure you can prove the facts and your actual damages.
ARBITRATION CAN’T BE FORCED IF YOU DON’T AGREE
DEAR BOB: We recently bought our first home. It was handled by a local Realtor who represented the sellers. Shortly after moving in, we discovered the roof leaks around the skylights. Also, we learned from the neighbors the sellers had tried many times to fix those leaks. A reputable renovation contractor says there is extensive damage and the only way to correct the problem is to remove the four skylights, repair the rotted lumber, and install new flashing. His cost estimate is $4,850. The written defect disclosure provided to us by the seller before the closing said nothing about the prior problems with the skylights and the seller’s apparent failures at attempting to eliminate the leaks. After our attorney contacted the listing agent and the seller, we were told any dispute about the sale must go to binding arbitration. However, we did not sign the arbitration clause in the sales contract. Can arbitration be forced on us without consent? –Beth W.
DEAR BETH: No. Unless you signed a written contract that provides for binding arbitration, you can sue the home seller (and listing agent if you can prove that person knew of the alleged non-disclosed defect) for damages, presumably the $4,850 cost of repairs.
If you are a regular reader of this column, you know I do not recommend signing a binding arbitration clause in a home-purchase contract. When buying a home, that is no time to give up your legal rights if a dispute later arises to a jury trial, court procedures and rules of evidence, and the right to appeal.
If a dispute arises after the sale, as in your situation, the parties can then agree to binding arbitration to save time and money if they both agree to give up their rights. For more details, please consult your attorney.
WHAT IF HOME SELLER IS UNREASONABLE?
DEAR BOB: We want to buy a home in a specific neighborhood in a specific school district. Few four-bedroom homes come up for sale in this area, which would be ideal for our family of three children. When our buyer’s agent phoned us about this new listing, we immediately inspected it and made a purchase offer. The house is in terrible condition, but the asking price is based on recent sales prices of similar nearby homes in tip-top condition. The seller wouldn’t even counteroffer us. But the listing agent said “Bring a full price offer if you want to buy this house.” As we are African-American trying to buy a home in a mostly Caucasian area, do you think this is illegal racial discrimination? –Mark H.
DEAR MARK: No. Without more information, you simply encountered an unreasonable home seller. Sellers don’t have to, and often don’t, make counteroffers.
If you really want to buy that house, it’s up to you to make another purchase offer.
WHAT IF RENTAL PROPERTY EXCHANGER TRADES DOWN?
DEAR BOB: You often explain that Starker exchange rule for rental property owners to avoid capital gains tax by trading up. But I want to trade down to sell my 10-unit apartment building for a less-expensive, luxury two-unit duplex where I will live in one unit as my residence. Will such a down trade be taxable? –Eugene C.
DEAR EUGENE: To qualify for a tax-deferred exchange of business or investment property for another such property, Internal Revenue Code 1031 requires trading equal or up in both price and equity. In other words, you can’t take out any cash or net mortgage relief (called “boot”) without paying capital gain tax.
The number of rental units is immaterial. To illustrate, you could trade from a $500,000 10-unit apartment building to a $1 million luxury two-unit duplex building and not owe any capital gain tax. However, all the units must be rentals. Your personal residence unit cannot be involved without owing tax. Please consult your tax adviser before proceeding.
DEEDING CONDO TO GRANDAUGHTER WAS COSTLY ERROR
DEAR BOB: Shortly before my grandmother died, she deeded her condo to me because she was living in an assisted-living center and had no plans to return to her condo. She died about three weeks later. However, I didn’t record the deed before her death. It turns out her will left the condo to her son (my uncle) who is now claiming it under the will. It is worth around $450,000 although grandmother only paid about $76,000 many years ago. Do I have a valid claim to the condo title? – Nancy R.
DEAR NANCY: Shame on you for not promptly recording your deed. If you had done so, you would clearly own the condo today.
Instead, your uncle can argue that because you failed to record the deed before your grandmother’s death, it was not delivered unconditionally so he inherits it under the will.
Also, because your grandmother deeded her condo to you before death, if your deed is determined by the probate court to prevail over the will provision, your adjusted cost basis will be grandmother’s low $76,000 adjusted cost basis rather than today’s $450,000 market value. My best advice is hire a super-sharp probate attorney.
The new Robert Bruss special report, “Probate Property Profit Secrets Revealed,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.
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