What is a quitclaim deed?
A legal instrument called a deed is used to change real estate ownership between parties. Three distinct categories of deeds exist: quitclaim, special warranty, and general warranty. The latter is also called “quit claim deeds” or, inadvertently, “quick claim,” a reference to the quitclaim deed’s speed. These three kinds of deeds grant title to a property.
How do warranty deeds work?
If you are transferring ownership of real estate, it is crucial to understand the distinctions between the two forms of warranty deeds.
General warranty
A general warranty deed certifies that the property is owned by the seller and hasn’t been sold before. It also states that no liens or other legal claims exist on the title of the property, nor do any debts uncovered during the probate process transfer with the property. General warranty deeds are the most effective in traditional sale agreements and are typically used in real estate transactions since they attest to the seller’s legal right to sell.
Special warranty deeds
Unlike general warranty deeds, special warranty deeds only guarantee that no debts or liens occurred during the current seller’s property ownership. They do not, however, make any guarantees regarding title defects, especially under the prior owner. A general warranty deed guarantees that the property is clear and free of any liens or claims. Put otherwise, the seller does not make any assurances to the buyer during a property transaction if there were claims on the property before the seller’s possession.
What does a quitclaim deed do?
Quitclaim deeds are the formal documentation property owners use to relinquish their claim to their properties. A quitclaim deed is called that because it indicates that the owner is giving up their claim to the land. In contrast to warranty deeds, quitclaim deeds do not protect the buyer. Similar to the unintentional mispronunciation of quitclaim as a quick claim, a quitclaim deed is a quick and easy method of transferring real land ownership from one owner to a different owner.
A quitclaim deed operates by transferring ownership without the seller providing any warranties. It just says that any ownership interest is transferred to the purchaser by the seller. That’s exactly what a quitclaim deed transfers to any buyer if the seller has no ownership stake in the property.
The founder and CEO of the real estate company Parker Marker, Jeb Smith, advises when to use a quitclaim deed. Remembering that a quitclaim deed offers no assurances or warranties regarding the property’s title is crucial. By signing the quitclaim deed, the signer is not guaranteeing the title to the property. Rather, they are simply relinquishing their ownership rights.
When is the right time to use a quitclaim deed?
A quitclaim deed shouldn’t be used in conventional real estate transactions since it does not protect the buyer. A clear title is not guaranteed. Rather, where there is a transfer of property that does not include a real estate sale, quitclaim deeds are used. During quitclaim deeds, neither a title search nor title insurance is required. Before doing this, speak with a lawyer, especially one experienced in family law, if there are any quitclaim agreements between relatives. Everybody concerned, including business partners, should speak with their own attorney.
Quitclaim deed transfers are the best option when:
- Passing a family member’s property interest to another, like a parent to their child.
- Transferring assets between partners, such as happens when one partner brings assets into a marriage.
- Transferring property in the wake of a divorce, in which the remaining ex-spouse lives in the house while the former spouse gives up ownership of the property.
- Converting personal property ownership into a living trust as part of an estate plan.
- Correcting any typos or mistakes in already-published titles
Property transfer via quitclaim deed
A quitclaim deed has to be written down to be legitimate and used to transfer property. A quitclaim deed requires the following information:
- The legal depiction of the property being transferred
- The name(s) of the person transferring the property (grantor)
- The county where it is located
- The property transfer date
- The name(s) of the person receiving the property (grantee)
The quitclaim deed must also state whether any money was transferred. This deed form does not suspend the mortgage obligation.
The grantor, who may not necessarily be the beneficiary or the person receiving the property, signs a quitclaim deed. The deed must be filed with the county clerk in the county where the real estate is located, and it is customary for the document to be notarized.
A quitclaim deed does not provide the level of security that a purchaser should require when buying real estate. Real estate agent Chuck Vander Stelt of Valparaiso, Indiana, cautions against the use of quitclaim deeds in this kind of transaction. He states that the buyer should view a quitclaim deed as a red flag in an arm’s length deal.
