Unless you’re a real estate agent, mortgage broker, or attorney, it is likely you don’t know the difference between the many types of deeds that can be used when transferring a piece of property. While they all do essentially the same thing – change ownership from one party to another – there are a number of details and nuances you’ll want to consider.
In this article, we’ll explore the many uses of a quitclaim deed, along with its pros and cons. As always, if you are in the process of buying and selling property, it would be wise to consult an attorney to make sure this critical legal document is properly executed – and that you are using the correct type of deed for your unique situation.
What is a quitclaim deed?
Before using a quitclaim deed, it’s important to know exactly what it does – and does not – do. It is arguably the simplest legal way to transfer property from one person (the grantor) to another (the grantee). In actuality, the deed allows a land or building owner to remove their interest or claim on the real estate in question (hence the name – you are literally ‘quitting’ your claim).
Any property transferred through a quitclaim deed is given “as-is.” In this way, it differs from a warranty deed and some other types in that the new owner would have no legal basis on which to make any kind of claim against the grantor. The quitclaim deed can be drafted without a title search or title insurance, and provides no guarantee the property is legally the grantor to give away.
Because of the lack of warranty, the quitclaim deed is most often used when no money is changing hands and deals are being completed with due haste. Though it comes with a small amount of inherent risk to the grantee, the simplicity and speed with which it can be prepared makes a quitclaim deed an attractive option.
When should I use a quitclaim deed?
Most often, quitclaim deeds are used when properly is being transferred from one family member to another. As stated above, usually no money is changing hands and in this case there would be trust between both parties.
These situations may include a parent giving ownership of property to a child when they retire elsewhere, downsize, or move into a senior housing facility; when property is going into a family trust, a quitclaim deed can be used to transfer the property to its eventual owner; when more that one sibling inherits property and one wants to grant their share to the other(s); or to add a spouse to the title or deed so that it becomes joint property.
On the flip side, a quitclaim deed may also be used in the event of a divorce, to remove the legal interest of an ex-spouse from property that was jointly owned. In some cases, a quitclaim deed may be used to make a correction – such as a misspelled name – on a previously recorded deed.
What are the pros and cons of a quitclaim deed?
Before having a quitclaim deed prepared for a property transfer, be sure to fully understand the pros and cons of this particular legal document.
In the pro column, the simplicity of a quitclaim deed tops the list. Templates can be found online for DIYers (though they should also be reviewed by an attorney), and they are typically on the shorter side. They require less information, no proof of ownership, and fewer hoops to jump through.
Their simplicity also makes it easy to transfer property among people who trust each other. In particular, this is a common choice for family members who decide to pass their home or land on to kin, like parents to a child, or from an individual into a revocable living trust.
Some of the cons are the other side of the coin from the pros. Because no proof of ownership or title insurance is required to execute a quitclaim deed, the grantee is accepting a risk that there could be legal entanglements on the property down the line and another party could lay claim to it. The deed transfers the property “as-is” and there is no warranty on its condition, title, or existing tax liens.
Another reason one might choose another type of deed over the quitclaim is that it will not suffice for mortgage lenders. When financing is in play, the quitclaim deed is not the ideal legal document to execute a transfer.
I’m still not sure if a quitclaim deed is right for me.
Real estate transactions are complex and can be intimidating to people who aren’t familiar with the processes and documents involved. You don’t need to go through it alone. If you’re not sure which type of deed is right for you, Quick Deeds can help by assessing your personal situation and recommending the best product to suit your needs. Contact us today at 1-888-949-9266 or email email@example.com.
Property transfers can be frustratingly long and can take weeks to months from start to finish. Here at quickdeeds.com, we pride ourselves on accurate documents prepared at record speed. When time is of the essence, you can rely on us to make the process simple, speedy, and safe.