# Quit claim deed



## Sabagley (Dec 31, 2012)

My sister-in-law and husband, ( who live in a different town), recently purchased some property and are getting ready to build on it. 

They have met with a builder who wants to fund the construction and have them quit claim the property over to him. Then after completion they will get a conventional loan and purchase the house and property back. 

This seems like a great way to get screwed out of the property if things go sideways. 

I don't know much about it, but I guess some of the larger companies do it. The " built on you lot, starting at 39$ sq/ft" guys. 

Anyone have any experience with this? 

My suggestion was to take any paper work to a real estate attorney, before they do anything.


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## sunkist (Apr 27, 2012)

Give up title on land already owned, then buy back land with house sitting on it?. Why?. Whats the reason for the thinking on this plan.


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## tenon0774 (Feb 7, 2013)

Sabagley said:


> My suggestion was to take any paper work to a real estate attorney, before they do anything.


That's what I would do.

There are several ways this could otherwise, go "sideways".


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## Calidecks (Nov 19, 2011)

Why wouldn't he want rights to the property if he's taking all the risk?


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## Calidecks (Nov 19, 2011)

And yes, jut like if you don't make your car payment things would go sideways.


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## tenon0774 (Feb 7, 2013)

Californiadecks said:


> Why wouldn't he want rights to the property if he's taking all the risk?


Never thought about it that way.

...and in my "sheepish" defense, I've never been that high up on the food chain in new construction.


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## Calidecks (Nov 19, 2011)

I would still talk to an attorney. Just to look at the paperwork. Make sure it has all your verbal agreements in the language.


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## thom (Nov 3, 2006)

This is a pretty standard way of doing things. The lot becomes the deposit or down payment. This protects the builder from the customer. If the builder is getting bank financing this is a requirement.


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## Needles (May 18, 2012)

I think I know what builders you are talking about. I doubt they want to screw anyone out of their property. They do realize for 39 a sq ft. They still have to pay for the site work and foundation from a outside contractor not connect with the builder and probably have to put in some sweat equity. All they will get is a water tight shell ready for trim, flooring and paint.


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## Sabagley (Dec 31, 2012)

From what I understand this GC used to be connected with one of the larger companies, but has broken off to do his own thing. 

I understand that as a builder he needs collateral if his is financing the project. 

Would there be a clause on the quit claim that the property would revert to the original owners if the house weren't built by a certain date? 
Or would that be in a separate contract? 

It's one thing if its a builder that is established and had been around for awhile.


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## thom (Nov 3, 2006)

Sabagley said:


> Would there be a clause on the quit claim that the property would revert to the original owners if the house weren't built by a certain date?
> Or would that be in a separate contract? It's one thing if its a builder that is established and had been around for awhile.


A deed is independent of a contract. The deed could have a clause that relates to a contract though, similar to a deed being subject to a mortgage.


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## TLHWindows (Jan 5, 2012)

Needles said:


> I think I know what builders you are talking about. I doubt they want to screw anyone out of their property. They do realize for 39 a sq ft. They still have to pay for the site work and foundation from a outside contractor not connect with the builder and probably have to put in some sweat equity. All they will get is a water tight shell ready for trim, flooring and paint.


I'm not going to say anything about the "quality" but there is at least one big contractor in my area that will build you a house on your own property for $30 a sqf. No appliances, but fixtures flooring etc. included. Basically ready to move in.


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## MTN REMODEL LLC (Sep 3, 2010)

Some food for thought and to evaluate.

Your risk.... how valuable is your land... what do you have at risk... is it a 10k lot or say 100k.

I'm assuming you can not get a conventional construction loan.

If so, does your builder need title to obtain financing, or just to insure ease of liquidation in the event that you can not perform. If your builder needs financing, I think he is under capitalized. What if he can't get sufficient funds to perform.

Even if he states he does not need financing, what prevents him from encumbering his title... either through a bank or thru MM claims.

What is your claim to the property. You have not given him collateral (that which he would have to foreclose) you have given him title. Are reverter clauses legal in your state without further legal action. Is your only claim in a civil contract suit. Is he giving you a first mortgage on your former land, requiring you to foreclose him.

What if you can't perform... you loose your job... interest rates skyrocket... (I'm assuming his completion is at least through a CO.) You apparently can't get a construction loan.

I can understand that your builder would want assurances of your ability to perform. Perhaps a first mortgage and limited completion payments. He would have to foreclose you out, but he would additionally have his GC MM claims against your home.


Ohers above have said this is sort of a conventional arrangement. I've never heard of it. Make sure it is a proven "conventional" financing arrangement ..IN YOUR STATE.

*Regardless of your assesment of the above risks, I would definately see a local RE attorney in this regard*. It seems fraught with risk on your part, unless your land value is nominal and his financing is extreemly important/necessary to you.

Good luck


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## Sabagley (Dec 31, 2012)

This is my in-laws house. I don't know their financial situation. I do know that the builder told them it would get the process going quicker. 
Which based on the banks around here, I believe.


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## Marven (Jul 15, 2013)

There are many different versions of this. If it were me, I would contact my bank since I will be borrowing the money from them anyway. I would put the land up as collateral against a construction loan. The contractor can then give the bank proof of work done and get advances on cost of construction per agreements.


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