House Calls by Edith Lank

Hello, Edith Lank: Would you explain the difference between a warranty deed and a quitclaim deed? We had a lease on a small acreage with a neighbor, and went ahead and purchased the land at the end of the lease. The lease agreement stated that a warranty deed would be given to us, but the neighbors gave us a quitclaim deed instead. We suppose this is fine, but not really knowing the difference makes us wonder. — B. and S.A.

Answer: The sellers who sign a warranty deed include guarantees that the buyer is receiving a clear title with undisputed ownership. They state that they own the property and that no one will challenge your right to it. If it later turns out there was once — for instance — a distant cousin way back who never signed off on the property, or some other cloud on the title, the sellers must fix the problem.

The signers of a quitclaim deed, on the other hand, simply say "We hereby give up (quit) any claim we may have in this property and we give it to you." If the people who sold you the land were the unquestioned owners, you received the clear title. But if it turned out they didn't even own the place, or someone else challenged your title, you couldn't go back and blame them. Their deed never even stated they were the owners.

That's why it's prudent to have a legal search of the title's history, or title insurance, before parting with your purchase money. But again, if your neighbors did have good title, then that's what you received. You can search the county's public records yourselves at this point, if it will ease your minds.

Quitclaim deeds are often used for simple transactions within a family, or to clear up minor problems affecting title.

Using Home Seller's Exclusion

Dear Edith: My mom has lived in her house since 1950 and is thinking about selling. In December 2005, she moved to a different state and left the house vacant. What month and year must the house be sold to qualify for the capital gain exemption? — J.K.

Answer: You'd want the closing, final settlement and transfer of title before December 2008.

Social Security Disability

Dear Edith: You published an e-mail from someone who cautioned that receipt of a trust by a disabled child could result in the child's Social Security Disability Insurance being terminated.

That is not true. The child could inherit any amount of money, trust or no trust, without jeopardizing disability benefits. Your writer was undoubtedly confusing Social Security Disability (SSD), which is an insurance program, with Supplemental Security Income (SSI), which is a federal welfare program. Obviously, receipt of sizeable assets could result in termination of welfare payments.

Many people confuse the two programs because of the similarity of the names. — W.R.

Answer: Many thanks for the reminder that I shouldn't let myself to be lured away from real estate and into areas I don't know enough about.

Condo vs. Townhouse

Dear Edith: Can you tell me the difference between a condo and a townhouse? — via e-mail

Answer: Although many people think of those words as meaning "an apartment," a condominium is really a legal form of joint ownership, and the word "townhouse" is an architectural term.

The person who buys into a condominium organization owns his or her individual unit "from the plaster in." Everything outside the apartment is owned jointly as "common elements" — stairs, hallways, roofs, furnaces, garages and underlying land. An office building can be organized as a condominium, and so could a shopping mall, or even a group of separate small houses. The usage you're most familiar with, of course, is ownership of apartments.

The word "townhouse," first of all, refers to an individual two-story residence joined to others by side walls. The units are sometimes known as row houses. No one else lives above or below a townhouse, and other units may be on either side.

Townhouses may be organized in different forms of joint ownership. Sometimes, as with a condominium, the land itself and the roofs might be owned in common by all the unit owners. In another townhouse development, each unit might own its underlying land and portion of roof, or even a small bit of lawn ("patio home").

The confusion comes because either of these terms might be used for individually owned units in a residential development. Before buying, you'd want to know exactly what the setup was, and what you'd be individually responsible for.

Edith Lank will personally respond to any questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com. Please visit her Web site at www.askedith.com.

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