Jurisdiction: North Carolina

    My business has a small portfolio of low value NC properties acquired via quitclaim deed (QCD) at steep discounts due to clouded title issues, and I'm curious what processes there are to 'upgrade' the QCDs to General Warranty Deeds.

    Those clouds are generally intractable difficulty in identifying ownership (the county can't find an heir after an owner's death, or the lot may be a gap/gore).

    In these cases NC counties generally don't or perhaps can't sell the property at a Tax Auction – since they can't inform the owner of the proceedings (with a possible exception of service by publication).

    This same problem complicates filing Quiet Title motions that would otherwise let me acquire full and clear title through the courts (not that it would be financially efficient to do so in any case given the low value of the lots).

    I go out to the property, confirm no visible encroachments exist, and then wait a year'ish to see if any encroachments are created or if any paperwork shows up contesting my ownership (this is intended to cut off adverse possession claims).

    After that, however… It seems like I could General Warranty Deep (GWD) the properties to my business to 'upgrade' the the deeds without any real liability until I eventually sell it to a 3rd party (at which point my business could be liable in the event someone comes along to contest the recorded ownership). I do enough due diligence to believe that it is highly unlikely a competing interest willing to pay to litigate over the lots will materialize.

    Does this 'File a GWD to upgrade from a QCD' strategy seems feasible?

    If not, is there an alternative to this approach or to a Quiet Title battle I'm unaware of?

    I'm aware that any detailed title search about these properties may highlight the unusual nature of the deeds, but that's a problem for the future.

    Upgrading from Quitclaim to General Warranty Deed in NC in case of Clouded Title?
    byu/LuigiBonnafini inrealestateinvesting



    Posted by LuigiBonnafini

    2 Comments

    1. A call to your attorney will confirm if your plan will work or not in the specific court you’re asking about.

    2. It typically makes no difference by which type of deed was obtained when selling. The title search/due diligence for the sale is still the same, going back beyond when you acquired them. And as a general rule, the giving of a Warranty Deed by a seller is of little use to the buyer since the seller may have no ability to cure/compensate for any defects.

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