What is a quitclaim deed?
Transferring property is no quick and easy task — most of the time, that is. Quitclaim deeds give homeowners a way to pass any interest they may have in a property to another person without jumping through the typical legal hoops you would expect.
Quitclaim deeds are designed to be relatively simple affairs. That doesn’t mean they’re always a good idea, though, especially since quitclaim deeds run a more limited title search than typical real estate transactions.
We’re breaking down everything you need to know about quitclaim deeds so you can make the best decision possible about using these sometimes risky legal instruments.
What is a quitclaim deed in real estate?
A quitclaim deed is a legal document that removes one person’s interest or claim on a piece of real estate, thereby granting a quick transfer of interest between two parties, known as the grantor and the grantee. Because it’s associated with lightning-fast property transfers, this type of deed is often mistakenly referred to as a quickclaim deed form. Trust us, it’s “quitclaim,” as in you quit your claim to ownership.
What makes quitclaim deeds appealing despite the absence of such safeguards is that they offer the simplest avenue to transfer ownership interest in real property. There are fewer processes, contingencies and warranties to work through, so property can easily change hands without too much effort or oversight.
That also means, however, that quitclaim deeds present a large amount of risk. With virtually no protections and guarantees built into them, these legal documents can be very tricky to navigate.
How do quitclaim deeds compare with other types of deeds?
The biggest difference between quitclaim deeds and similar types of deeds is that a quitclaim doesn’t offer any guarantees about the ownership status or validity of the claim. In that light, they differ quite a lot from other types of deeds you may encounter as a prospective homebuyer:
- General warranty deeds
- Special warranty deeds
General warranty deeds
Not only do general warranty deeds provide certification from the seller that a title is free of defects like liens and other encumbrances, but they extend all the way back across the entire history of a piece of property. With a general warranty deed, the seller is providing a guarantee that the title on your new home is clear and that your ownership status will be in good standing.
Quitclaim deeds provide no such assurances. In fact the seller using a quit claim deed isn’t even certifying that they actually own the property. They are simply indicating that if they have any interest in the property, it is being conveyed.
Special warranty deeds
Similar to general warranty deeds, special warranty deeds also include certification from the sellers confirming the clear status of the property title before it passes to a new owner. The major difference is that while general warranty deeds go back over the property’s full history, special warranty deeds only cover the seller’s time as owner. There’s still a chance the title has some underlying issues, but a special warranty deed offers far more assurances than a quitclaim deed.
What are the disadvantages of a quitclaim deed?
Both grantors and grantees need to be aware of the risks associated with quitclaim deeds. If you’re in the market to buy a new house, understand that a quitclaim deed can expose you to all kinds of legal issues, ownership disputes and other headaches.
By far the biggest downsides to this type of deed include:
- No protection from title defects
- No guarantee of the grantor’s right to sell
No protection from title defects
You should always know what you’re getting yourself into before taking ownership of a piece of real estate. Most buyers perform a title search to determine if there are clouds on the title that must be resolved before they purchase real property.
Acquiring property using a quit claim deed, skipping the title search and declining to purchase title insurance could leave you on the hook for any number of title defects. Liens, unpaid property taxes, encroachments and other encumbrances will cause a ton of problems for new homeowners, especially if you want to sell the property yourself one day. You may need to cover the cost of unpaid liens or property taxes to get the title back in good standing.
It’s not unheard of for sellers to use quitclaim deeds and skip the title search to prevent any title defects that might scuttle the sale from coming to light. You should be skeptical of any deal on a house that’s contingent on transferring property from one person to another with a quitclaim. The prospect of low mortgage rates may be enticing, but if the sale price seems too good to be true, there’s probably a catch.
No guarantee of the grantor’s right to sell
Paying someone’s lien or property taxes is a bad situation to be in, but it’s arguably not the worst-case scenario with a quitclaim deed. With these types of deeds, there’s no way to guarantee that the grantor is actually the property owner and, as such, legally authorized to sell the home. Without a title search to verify ownership, you’re taking a seller at nothing more than their word — and that’s an enormous risk when it comes to buying a home.
You can mitigate some of that risk by insisting that the quitclaim deed is insured with an owner’s title policy.
When would you use a quitclaim deed?
Given some of these concerns, it would be unwise to use a quitclaim deed for just any situation. There are very specific scenarios when it makes sense to take advantage of this legal instrument:
- Transferring your title to your family members
- Removing someone from your title
- Adding someone to your title
- Cleaning up simple title vesting errors
Transferring your title to your family members
If you’re looking for a relatively quick and easy way to pass your property title to a loved one, a quitclaim deed will get the job done nicely. For instance, you may want to transfer property interest to your children, your spouse or even a family trust.
Removing someone from your title
Certain life events, most notably a divorce, may require the homeowner to remove another person’s name from the title. Dividing up assets during a divorce can be a very stressful and tense affair, but as long as both parties agree to it, using a quitclaim deed can speed things along.
Adding someone to your title
Conversely, there are times where you may want to add someone to your property title without jumping through a lot of legal hoops — for instance, putting a new spouse’s name on the title.
Cleaning up simple title defects
Don’t overlook seemingly small and innocuous errors with your title vesting. A misspelled name, incorrect lot number or outdated marital status could disrupt the chain of title and create headaches when it comes time to sell or pass along the property. In certain cases, quitclaim deeds are the quickest way to clear up potential interest claims without getting title insurance involved.
Know how quitclaim deeds work in your state
Although quitclaim deeds essentially function the same no matter where you are in the U.S., there are additional considerations and state requirements to keep in mind depending on where you live.
Texas is one of the more notable examples to consider. Few states have outlined the parameters of a quitclaim deed quite as thoroughly as Texas. Over the years, Texas courts have weighed in multiple times to reinforce the responsibilities of the grantor when using a quitclaim deed — that is, they have none. Don’t expect to make much headway contesting quitclaim issues in the Lone Star State because the court system has made it very clear that a quitclaim deed conveys the chance of ownership and nothing more.
In addition, Texas-based title companies routinely refuse to insure a title when a quitclaim deed is involved. That’s because of the language contained in certain property codes that are on the books. Know that, generally speaking, you face an uphill battle if you use a quitclaim deed to acquire property in Texas.
Quitclaim deed form requirements may also vary in other ways from state to state and possibly even county to county. For instance, some states like Illinois require additional documentation as well as authorized signatures from various parties.
Is a quitclaim deed right for you?
A quitclaim deed is so specialized that it’s only useful in specific situations. Given the lack of guarantees and warranties, most homeowners should find an alternative means to pass property to other people.
Still, there’s no denying the simplicity and speed of a quitclaim deed. If you find yourself needing to quickly remove yourself or someone else from a property title, there’s no faster way to go about it than a quitclaim deed.
Quitclaim deed forms are legal documents used to remove the grantor’s interest on a piece of property, allowing them to quickly hand over real estate to another person.
These types of deeds can be very risky, especially for the homebuyer or grantee, so it’s best to approach them with caution. As with any situation involving a deed transfer or property title claim, consult a real estate attorney to get the best advice possible and avoid any unintended consequences.
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