My brother is selling me his house and we want to use a "Quit Claim Deed" to put it under my name. My question is, What are the PROS and CONS of me putting in the Quit Claim Deed that I purchased (CONSIDERATION)the house for $1.00?

Let me first make a suggestion that might save you some grief, maybe immediately, but more importantly in the future if you decide to sell that house.

You don't say what state you're in so I don't know the most common way to transfer real estate in that state but whether it's a title company or an escrow company, pay them a few hundred bucks and get it done the right way and the best way.

Getting a 'do it yourself' quit claim deed from US legal forms MIGHT get the job done and COULD be OK when you want to sell or refinance at some future date but correcting real estate usually costs a lot more than not making them in the first place.

"Consideration", something of value offered in an exchange, can be anything from a nominal amount of cash, i.e. $1.00, but it's really not a requirement.

If you want to fancy up your quit claim deed a little you could say something like: "For and in consideration of the sum of One Dollar ($1.00) . tendered herewith brother Darryl...............etc.,etc."

However I urge you to at least explore the title or escrow company route for your own protection.

Easy to screw up a real estate transaction, harder to fix later.

Two other considerations:
1. If you are really paying $1.00 for it, you should have a title search to see if there are other liens on the property. What if your brother has mechanic or contractor liens, they go with the house, not the seller. How about IRS or other taxing authority liens? A quit claim deed is the least favorable quality deed to a buyer, because the grantor is only giving up their interest in the property but not warranting anything else.
2. If you are actually paying a market price, but want to use the quit claim as a means of lowering some kind of real estate transfer tax, use caution. Local taxing authorities may question this kind of transaction and will not only expect to collect the "real tax" but also try to collect a penalty

And like Jim Lee, I'm not an attorney or giving legal advice, just trying to point out some possible pitfalls.

Thanks everyone for the fast response. I will do a title search on the house. My brother said that he would take care of any liens that might show up. I am planning to fix this house and than sell it. Jim, are you saying that I might have problems sell it in the future even if the Quit Claim Deed is recorded in the city of Camden?

Figure in 35 percent capital gains tax on that on your profit when you sell.

Why take the risk of using a Quit Claim Deed? You can still "pay" what ever you want using a Warranty Deed which will be far better accepted in any future sales or mortgage applications. Quit Claim Deeds are actually no Faster but far less protective than Warranty Deeds since your doing a title search, have your brother Warrant Title via a Warranty Deed... you DO NOT have to pay for Title Insurance with a Warranty Deed although most closing companies and some closing attorneys will tell you to... they make money that way.

Oh yeah forgot to mention you can quit claim a property to 100 people but it does not change the fact that the bank is holding a mortgage on the property and they are almost always in senior position.

Often times people confuse quit claiming with getting off the hook with there mortgage company.All the quit claim is doing is giving up your interest in the property.It does not relieve that person of there responsibility on the mortgage.If your brother owes taxes they can still come after him.

I don't know your capability to do your own title search but I've been in the real estate business since 1978 and WOULD NEVER dream of doing my own title search or one for a client.

That's what lawyers do and get paid for knowing how to do it the best way.

You could have problems in the future going the do it yourself route if you record the deed in Camden, Washington, D.C., Paris, and London.

Nothing is a problem until it's a problem.

Can I avoid this by putting the profit into my current home mortgage or buying another house for investment? I prefer to put it in my current home to lower my mortgage.

You need to check with a tax professional relative to your present tax situation.

I buy and sell investment properties pretty often and if you hold them over 1 year the long term capital gains tax is generally around 15% for me.

You can't escape taxes by putting profits from an investment property into your principal residence.

Generally prepaying any sort of mortgage does not lower the payment; it only shortens the term of the loan.

It used to be relatively common for deeds to specify the sale price as "$1.00 plus OGVC".
The OGVC was Other Good and Valuable Consideration. It was an attempt to hide the true sale price as the other consideration was typically more dollars. The attempt was only successful with those that didn't understand they could calculate the selling price from the transfer tax paid (as marked on the recorded copy) and the tax rate in effect at the time of the sale.

By all means go the Warranty Deed (preferably with lien covenant) route rather than Quit Claim if there are no issues in the title report, it will save having questions asked when it is time to sell.

"or buying another house for investment? "

You can do a 1031 exchange to put the profits into another investment property. This defers capital gains taxes.

Talk with an cpa/attorney/title company. They can advise you.

I don't know the purpose of the transfer but if its to avoid creditors, you may incur some liability.

Just check the recorders office first.

They can not only still come after him... the mortgage is still attached to the real estate and they can demand full payment immediately when/ if the sale is discovered. Even if you paid hundreds of thousands of dollars, the sale could be reversed and it would be up to you to get your money back from your bro..

If your trying to help him... just make sure you are not going down with the ship.

Spend a few dollars. Have a title company or attorney's office do a title search. Also, talk with an attorney to see what deed would be best in your situation.

If you screw up the purchase of real estate, most always the sale will be screwed up as well. Spend a little money to get things squared away right now. I am sure you would hate it to have a contract fall through because of erroneous title work done when you originally bought it.