Quitclaim Deeds: Origins, Benefits, and Risks

A quitclaim deed is a legal document that transfers real estate ownership from one party to another. This article will explore the origins of quitclaim deeds, explain how they work, and discuss their benefits, disadvantages, and risks. We will also discuss the legal requirements for a quitclaim deed and the importance of working with a real estate attorney.

Origins of Quitclaim Deeds

The quitclaim deed is rooted in English common law, where it was used to transfer land ownership. The term "quitclaim" refers to a release or surrender of a right, and a quitclaim deed is used to release any claim or interest that the grantor may have in the property being transferred.

How Quitclaim Deeds Work

A quitclaim deed transfers real estate ownership from one party to another without any warranties or guarantees. Unlike a warranty deed, which guarantees that the title to the property is clear of any encumbrances or defects, a quitclaim deed only transfers the interest that the grantor may have in the property. This means that the grantee assumes all risks associated with the property.

Benefits of Quitclaim Deeds

There are several benefits to using a quitclaim deed. One major advantage is that it can be a quick and easy way to transfer real estate ownership, especially in cases where the parties know each other and have no property disputes. A quitclaim deed can also transfer property to a family member or business partner without incurring a transfer tax.

In Vasilatos v. Board of Trustees of the City of Northfield, a New Jersey Superior Court case, the court found that a quitclaim deed was a valid means of transferring ownership of real estate. The court held that the quitclaim deed conveyed the grantor's interest in the property and that the grantee assumed all risks associated with the property.

Other Benefits of this type of deed:

• Can be used to remove someone's name from a property title, such as in the case of a divorce or property dispute

• Can be used to transfer property to a living trust or other entity

• May be less expensive than other types of property transfers

• Can be a useful tool for transferring partial ownership of a property

• Can be a useful tool for gifting property to family members or friends without incurring gift taxes

• Can be used to clear up title defects or discrepancies

• Can be a useful tool in resolving boundary disputes

• Can be used to transfer property to a spouse or domestic partner in the event of a marriage or partnership dissolution.

Disadvantages and Risks of Quitclaim Deeds

While quitclaim deeds offer some benefits, there are also significant risks and disadvantages associated with their use. One major disadvantage is that the grantee assumes all risks associated with the property, including any defects in the title, liens, or encumbrances. This can be a significant risk if the grantor has any outstanding debts or judgments against them, as these can attach to the property and become the grantee's responsibility.

In Mendillo v. Board of Education of the Town of Newington, a case from the Connecticut Appellate Court, the court found that a quitclaim deed did not relieve the grantor of a judgment lien against the property. The court held that the judgment lien attached to the property became the grantee's responsibility, regardless of whether or not they were aware of the lien at the time of the transfer.

Other types of disadvantages and risks:

• Grantor retains no liability for any title defects or other issues with the property

• Grantee assumes all risks associated with the property, including any title defects or encumbrances

• May not provide any warranties or guarantees regarding the quality of the property's title

• May not provide clear evidence of ownership of the property, particularly if the transfer is not properly recorded in the public records

• May not provide clear evidence of the parties' intentions regarding the transfer of the property

• May not protect the grantee against future claims by third parties with a legal interest in the property, such as lienholders or judgment creditors

• May not be an appropriate tool for transferring property in certain circumstances, such as in the case of a sale or mortgage transaction where the lender requires a warranty deed.

Legal Requirements for Quitclaim Deeds

To create a valid quitclaim deed, certain legal requirements must be met. These include proper drafting and recording of the deed, compliance with state-specific requirements, and limitations on the types of property that can be conveyed.

The Importance of Working with a Real Estate Attorney

Due to the risks and legal requirements associated with quitclaim deeds, working with a real estate attorney is crucial when creating and recording the deed. A real estate attorney can ensure the deed is properly drafted and recorded and provide guidance on any potential risks or liabilities associated with the transfer.

In Perry v. Atkinson, a case from the Georgia Court of Appeals, the court found that a quitclaim deed was invalid due to a failure to comply with state-specific requirements. The court held that the deed did not contain the necessary language required by Georgia law and was, therefore, invalid.

Working with a real estate attorney can also help to ensure that the transfer is properly recorded in the public records. This can provide important evidence of the transfer and can help to prevent any future disputes over ownership of the property.

Conclusion

Quitclaim deeds can be a useful tool for transferring ownership of real estate, but they also come with significant risks and disadvantages. While they offer some benefits, such as a quick and easy means of transferring ownership, they also carry the risk of title defects and other encumbrances. It is crucial to work with a real estate attorney when creating and recording a quitclaim deed, to ensure that the deed is properly drafted, recorded, and compliant with state-specific requirements. By doing so, property owners can avoid potential legal and financial risks associated with the transfer.