I'm trying to find meaning in these odd homeownership patterns. Please help.

April 29, 2008 6:32 PM

Help me understand quit claim deeds, why they are so prevalent in this particular heavily-foreclosed-upon Washington state neighborhood I am researching, and some other fishy data I have uncovered.

I am researching a 92-home subdivision somewhere in Washington state. The results of my research don't make a lot of sense. Can you help?

My interest was piqued originally because 14 of the homes are in, or have recently been, in foreclosure, which is much higher than the local, state and national foreclosure averages. So I've looked up the individual property records for each home.

The vast majority of the houses belong to people whose last names fall into one of two ethnic groups (eastern European and a particular Asian nation).

About 20 of these homes have zero-dollar quit claim deeds filed within the past three years, so the property changed hands without any money changing hands. In some cases, there have been two or three quit claim deeds.

A quarter of these large $250,00-$300,000 suburban homes with yards are owned by people who live off site - the owners registered addresses are not the same as the address of the house.

Is this normal? Is there something about quit claim deeds that I don't understand that would explain this number of transactions? Are there rational conclusions that I should be able to draw from the information I have unearthed so far? As I head back to the court house to do some more digging tomorrow, what should I be looking for? If I eventually visit the neighborhood, what should I watch out for?

My initial goal was to understand why this neighborhood's foreclosure rate was so high, but now I also want to understand what other forces may be at play in this neighborhood.

posted by croutonsupafreak to home & garden (9 comments total)

I don't know if this is the case in your particular area, but quitclaim deed fraud is prevalent in some parts of the country. I found an article about the problem in Florida that says "This type of fraud is as easy as filing fake papers indicating a change of property ownership with county clerks. Fake deeds are offered to lenders during a refinancing process, the new "owners" walk away with cash, and the victimized owners often are clueless."

Googling for quitclaim deed frauds and scams reveals more.
posted by amyms at 6:53 PM on April 29, 2008

The foreclosure rate could be high because there was a bad lender involved. Someone gets a "good" deal and passes the idea along to their friends and family.
posted by gjc at 7:38 PM on April 29, 2008

About 20 of these homes have zero-dollar quit claim deeds filed within the past three years, so the property changed hands without any money changing hands.

How do you really know this? Money may have changed hands, pursuant to a contract that was not recorded. The fact that the quitclaim deed does not recite any consideration does not mean that money didn't change hands.

I don't think that what you've found sounds fishy. I suspect that, rather than anything nefarious going on, you don't understand how the real estate transfers operate in that area, and you are leaping to conclusions.

Pay a real estate lawyer for their time, and it would clear up these questions.
posted by jayder at 7:46 PM on April 29, 2008

Yeah, talking to a lawyer might help clear some of the questions up. If you're a journalist, maybe give a law professor in real property a call - say you're doing research for an article, and you might be able to get some information. Dangle the possibility of being mentioned in your article, and there's a good chance you'd get some help. On the substance of your actual question, though, I'm afraid I don't have anything.
posted by chinston at 8:09 PM on April 29, 2008

A quitclaim deed doesn't necessarily transfer ownership. What it does is disclaim any ownership interest in the property on the part of the party filing the quitclaim deed. For example, if two partners owned a property together, one partner could transfer full ownership to the other by filing a quitclaim deed that cedes his/her own ownership. So I could give you a quitclaim deed on the Empire State Building or the Transamerica Pyramid, but it wouldn't actually mean anything, because I don't own any part of those buildings, and neither do you, so I wouldn't be giving anything up and you wouldn't be getting anything.

I can't explain the pattern you're seeing in property records, however. Perhaps a divorce was involved, and one former spouse bought out the other or otherwise received the house in the proceedings, so the other spouse signed a quitclaim deed? Perhaps they were investment properties owned by a syndicate that dissolved?
posted by brain at 8:37 PM on April 29, 2008 [1 favorite has favorites]

Brian is mostly correct on how quitclaim deeds work, except that the person disclaiming ownership is generally conveying any ownership interest that they have (which could be none) to a particular person or business entity.

A quitclaim deed doesn't mean the property changed hands -- I could give you a quitclaim deed, ceeding to you the whole of any interest that I have in, say, a particular bridge. You might file the deed at the courthouse where the bridge is, or not, as you see fit. Since I don't have an ownership interest in a bridge, I haven't actually given you anything.

Sometimes quitclaim deeds show up post-divorce, even years later, when a former spouse wants to sell. A title company might require a quitclaim deed from the former spouse, even if the spouse doesn't currently claim an ownership interest in the housse, to issue a title policy.

A quarter of the homes having a different address on the tax records doesn't sound all that high. Some of these may be owned by people who prefer to get their mail at a po box, me by landlords, and some by a family member of the person living there. Having a higher than average number of foreclosures isn't unusual either -- if this doesn't make sense to you, you need to learn how averages work.

If you are considering buying a house in this subdivision, I suggest you involve a title company that can provide you with title insurance that will cover you just in case you've tried to buy a house from someone who isn't actually able to sell it to you.
posted by yohko at 10:10 PM on April 29, 2008

At the risk of telling you how to do your job, I'll tell you about a few of the things I use when I'm doing my job, which often involves Washington real estate:

(1) King County IMAP. Cross-referenced against county recorder's' database, this application will tell you lots of things about a parcel you're interested in, as it's in King County. It's unbelievably info-dense. Need to know where the parcels are in relation to each other? You'll find that here? Need to know the assessed value, or who's on the tax roles? You;ll find that here. Want to know about the topography? Ditto. It's kind of unbelievably great.

(2) Real Estate Excise Tax Affidavits (or "REETA"s). Each time real property changes hands in the state of Washington, you have to file a REETA to prove that you've given the state a cut of the sale price. These are on file with the county recorder, and are often available online. (I would link to one, but online search results at the King County Recorder's Office expire fairly quickly, and the link might die before you got a chance to use it.) They're particularly useful for understanding zero-dollar land transfers.

As it turns out, even if you transfer a piece of property for a miniscule dollar amount, you still have to pay significant excise tax, unless your transfer fits into one of several exemptions outlined in the Washington Administrative Code. The REETA for the transfer of interest will tell you which exemption (if any) the grantee claimed. A blank PDF of a REETA is available online here. The information you want (on a completed one) will be under heading 7. Exemptions you may see include: (a) Transfers resulting from a divorce decree (b) No change in beneficial interest (i. ethe property is moving from one entity that the grantor owns to another entity that the grantor also owns )(c) Transfers to revocable trusts, (d) numerous others. Do be careful with the numbers, however. The part of the Washington Administrative Code that deals with this has been re-numbered a bit in the last few years.

(3) The Washingon State Courts' search-by-name utility. Available online on the state government's website, this utility will allow you to do a rudimentary background check out the names on those quit claim deeds for free. Using this, you may find out that, say, an estate was probated at around the same time a round of deeds were recorded. You may also find out that some of the names on those QCDs are associated with other sketchy activity.

(3) The Washington Secretary of State's digital archives. The information in these is not particularly fresh, but you can find all kinds of stuff, such as birth, military, and death records, that may shed some light on the relationships between the grantors and the grantees of the parcels you're researching. And it's free, which is nice.

(4) The Washington Department of Licensing's online UCC filing database. Here, you look up individuals, businesses, etc., and find out whether they've given a lender a secured interest in real or chattel property. Depending on what your other research has turned up, this might be of value in understanding the grantors and grantees business relationships, and their debt structures.

Hope this helps! (And sorry about the spurious bolding, above. I don't understand why it's doing that, or how to make it stop.)

posted by palmcorder_yajna at 10:46 PM on April 29, 2008 [2 favorites has favorites]

Quit Claim Deeds are very common in divorce and inter-family property transfers. If you are talking about ethnic groups that would typically live in multi-generational groups, quit claim deeds between family members would not be unheard of, depending on who was financing the house.
Family members would sign over rights to the house if the relative could get a better mortgage deal, but know that within the family group their right to the home would be honored.
posted by readery at 5:30 AM on April 30, 2008

You rock, palmcorder_yajna. That's exactly what I was looking for, thank you.
posted by croutonsupafreak at 12:10 PM on April 30, 2008