There’s a world of difference between a quitclaim deed and a warranty or grant deed.
A quitclaim deed can be useful when you’re transferring property to family members as a gift or in a divorce, but in other circumstances it can be problematic. The grantor gives up his or her claim to the property, but this doesn’t mean you now have title; you may have received a pig in a poke.
It’s all about title
With a quitclaim deed, there is no warranty (guarantee) that the giver is conveying title; there could be other claims on it. Whereas with a warranty or grant deed, the buyer has legal ownership of the property. A title insurance company has cleared the title and sold the buyer a title insurance policy, which will pay costs if there is a subsequent problem with the title.
So why accept a quitclaim deed? It’s an inexpensive way to transfer property, and, while an owner of a property acquired by quitclaim deed can’t sell it without a clear title, the property can be sold later after a warranty deed is obtained.
To sell via a warranty deed, you’ll need to pay a title insurance company for a title search; this involves looking for potential legal issues such as liens or previous disputes.
You can then buy title insurance and, with legal title, transfer the property through a warranty deed. To be legal, this must be filed at a recorder’s office in the area in which the property is located.
Selling a home with a quitclaim deed?
Sure, a quitclaim deed can help you transfer ownership of a property quickly and easily, but it’s not something that you should do without fully understanding the process. Also called quit claim deeds or quick claim deeds, it provides yet another way to transfer real estate beyond the common warranty real estate deed transfer that accompanies most property sales.
Unlike a quitclaim deed, a warranty deed includes protections for the buyer, including compensation should someone else own a superior deed to the property in question. That’s because a quitclaim deed doesn’t promise that there are no liens or other issues with the property, as opposed to a warranty deed that requires a title search and vetting
For the most part, a quitclaim deed is typically used when one owner relinquishes control of their claim to a property to the other owner, such as a spouse that is denying ownership over a jointly owned home. Note that a quitclaim deed does not absolve responsibility for paying a mortgage or if there are any liens on the property, so just because you were gifted a property in a quitclaim deed, you may still owe money or have mortgage responsibilities.
Do you need a quitclaim deed?
When a piece of property is transferred outside of a traditional sale, a quitclaim deed is often used. This is common for transferring property between family members (i.e., parents transferring a home to their children), as well as in cases of both married and divorcing spouses — basically so that new ownership can come in without having to go through the complicated sales process.
Sometimes a quitclaim deed is used to clear up a property’s title, especially when there’s a question about ownership or some kind of ownership right to the property. In these cases, one party may be asked to sign a quitclaim deed relinquishing control so that the property can be sold or otherwise accounted for properly.
Creating a quitclaim deed is rather straightforward, but the form must be in writing to be valid. The document needs to include a legal description of the property, the residing county, date of transfer and the grantor and grantee, as well as documenting any payment for the transfer. It’ll also have to be notarized, signed and filed with the county clerk, depending on the rules and regulations for your local area.