Key Takeaways:
– A quitclaim deed is a legal document used to transfer property ownership from one owner to another without any money exchanged.
– It is often used when a property owner wants to give a property away or when there are issues with the title.
– Unlike a warranty deed, a quitclaim deed does not provide protections such as title insurance or a title search.
– The grantor must continue paying any mortgage on the property, but the new owner is responsible for liens, back taxes, and other costs.
– Quitclaim deeds are useful for family transfers, marriage or divorce, owner name changes, transferring ownership to a business or trust, removing a title issue, gifting property, and correcting errors on a deed.
– To create a quitclaim deed, you can obtain a form from a real estate agent or attorney, fill out the necessary information, and have it notarized and recorded at the county recorder’s office.
– Quitclaim deeds provide less protection than other types of deeds, but they can simplify the process of making changes to a deed.
BiggerPockets:
When you buy or sell property, a deed transfer takes place. A deed is a legal document that proves you have ownership in a piece of property.
Sometimes, properties may not have a clear title or line of ownership. If a property has any issues with its title, an owner may choose to provide a quitclaim deed. These deeds are also referred to as quick claim deeds because the transfer of property can happen much faster using this type of deed.
This guide will explain everything you need to know about the quitclaim deed.
What is a Quitclaim Deed?
A quitclaim deed is a legal document used to transfer property ownership from one owner to another. Typically, no money exchanges hands during these real estate transactions.
Quitclaim deeds are most often used when a property owner wants or needs to give a property away. With a quitclaim deed, the grantee, or person taking over the deed, can only claim an ownership interest the grantor, or person giving over the deed, has the rights to at the time of the transfer. In some cases, this type of deed can transfer no ownership or interest.
If a property doesn’t have a clear title, the owner may provide a quitclaim deed. However, keep in mind that a quitclaim deed offers no guarantees or warranties that the title or the property has no liens, restrictions, or encumbrances, and there is no recourse for the grantee if title issues come up later. The property transfer is based on trust between the grantor and grantee.
Quitclaim Deed vs. Warranty Deed
When it comes to real estate property, there are several types of deeds you should be aware of. The quitclaim deed and the warranty deed are some of the most common, but the two have differences. The warranty deed provides grantee protections that quitclaim deeds do not.
With a quitclaim deed, also known as a non-warranty deed, you won’t get title insurance, and no title search is done during the transfer. This means that any title issues or ownership disputes are the sole responsibility of the grantee once the quitclaim deed is recorded.
The grantor must continue paying any mortgage they have left on the property, but the new owner will pay any liens, back taxes, or other costs and fees that come up. You may have to figure out how to fix the title as well.
Conversely, a general warranty deed guarantees that the grantor has the right to sell a property, as they are the owner. The title is guaranteed to be free and clear of any previous debts or liens against the property, except for those already disclosed to the buyer.
Most notably, a warranty deed is transferred after a title search has been conducted, so buyers can be certain a property has a clean title history. Buyers can buy title insurance with a warranty deed too, protecting themselves if there are future complications.
With a general warranty deed, the seller promises:
- They have the right to convey the property.
- They can and will defend the property title against claims.
- They have ownership of the property.
- There are no encumbrances against the property unless stated otherwise in the deed.
When to Use a Quitclaim Deed
Quitclaim deeds are useful for changing or correcting mistakes on a title without paying any fees.
Here are some other examples of when a quitclaim deed might come in handy:
- Family transfers: Quitclaim deeds make it easy to transfer property ownership to parents or children, siblings, or other closely related family members.
- Marriage or divorce: Property owners can use a quitclaim deed to add or remove a spouse from the property title if they get married or divorced.
- Owner name change: When a property owner’s name changes, they must change the deed information so the name change appears on the title.
- Transferring ownership to a business: Transferring real property to corporations and LLCs is a common method of protecting assets from creditors to limit personal liability.
- Transferring ownership to a trust: If there’s a property you hope to pass down through the generations, a good first step is a quitclaim deed transferring it into a trust.
- Removing a title issue: Title companies may find an issue during a title search where a third party has an interest in the property, causing a possible break in the chain of title. The title insurance company will require that party to quitclaim their interest in the property before issuing a clear title.
- Gifts: Quitclaim deeds can be used to give property to family and friends, but talk to a tax professional about the limits on gift-giving.
- Error correction: You can correct deed errors like misspelled names or other minor errors using a quitclaim deed.
Process of Creating a Quitclaim Deed
You can get a quitclaim deed form from your real estate agent, real estate attorney, or by finding a free template online. A quitclaim deed isn’t binding until it gets notarized and then recorded at the county recorder’s office.
The document must include:
- The legal description of the property
- The county where the property is located
- The date of the transfer
- The names of the grantor and grantee
- The price paid for the property, if any
The grantor must sign the quitclaim form in front of a notary. Depending on the state, witnesses may be required or substituted. Some states may require the grantee to sign the quitclaim deed too.
How to Obtain a Warranty Deed
Warranty deeds are similar to quitclaim deeds when it comes to obtaining them. You can get a deed form by asking the real estate professional you’re working with or using an online version of the form.
The most important thing when transferring a warranty deed is to sign the document in front of a notary. Once the deed has the signatures it needs from the grantor and grantee, it can be filed with the county recorder.
Make sure the information on the deed is filled out correctly and completely before you submit it. Making changes to a warranty deed after it’s recorded by the proper channels can be a process. A quitclaim deed can simplify the process of making changes to a deed, but it can still take time and effort.
Final Thoughts
Quitclaim deeds are a good tool for real estate investors to understand. Using a quitclaim deed allows you to transfer property from one owner to another with less hassle, but also less protection than other types of deeds.
Knowing what a quitclaim deed is means that when you take over a property, there are no surprises if issues arise with the title. BiggerPockets forums are a great place to learn more about deeds and how they work.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
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Property Chomp’s Take:
When buying or selling property, a deed transfer is an essential part of the process. A deed is a legal document that serves as proof of ownership of a piece of property. However, there are instances where a property may not have a clear title or a well-defined line of ownership. In such cases, the owner may choose to provide a quitclaim deed.
A quitclaim deed is a legal document used to transfer property ownership from one owner to another. Unlike other types of deeds, such as warranty deeds, no money is exchanged during the transfer. Quitclaim deeds are commonly used when a property owner wants or needs to give a property away. The grantee, or the person taking over the deed, can only claim ownership interest that the grantor, or the person giving over the deed, has at the time of transfer. It is important to note that a quitclaim deed does not offer any guarantees or warranties regarding the title or any liens, restrictions, or encumbrances on the property. The transfer is solely based on trust between the grantor and grantee.
In comparison, a warranty deed provides protections to the grantee that a quitclaim deed does not. With a quitclaim deed, the grantee does not receive title insurance, and no title search is conducted during the transfer. This means that any title issues or ownership disputes become the sole responsibility of the grantee once the quitclaim deed is recorded. The grantor must continue paying any existing mortgage on the property, while the new owner is responsible for any liens, back taxes, or other costs that may arise. On the other hand, a warranty deed guarantees that the grantor has the right to sell the property and that the title is free and clear of any previous debts or liens, except for those already disclosed to the buyer. A title search is conducted before the transfer, providing buyers with certainty that the property has a clean title history. Buyers can also purchase title insurance with a warranty deed to protect themselves from any future complications.
There are several situations where a quitclaim deed may be useful. For example, it can be used for family transfers, such as transferring property ownership to parents, children, or siblings. It can also be used for marriage or divorce purposes, allowing property owners to add or remove a spouse from the property title. In cases of owner name changes, a quitclaim deed can be used to update the information on the title. Transferring ownership to a business or a trust, removing a title issue, making gifts, and correcting errors on a deed are other instances where a quitclaim deed may come in handy.
To create a quitclaim deed, you can obtain a form from a real estate agent, real estate attorney, or find a free template online. However, the deed is not binding until it is notarized and recorded at the county recorder’s office. The document should include the legal description of the property, the county where the property is located, the date of transfer, the names of the grantor and grantee, and the price paid for the property, if applicable. The grantor must sign the quitclaim form in front of a notary, and in some states, witnesses may be required. Some states may also require the grantee to sign the quitclaim deed.
Obtaining a warranty deed follows a similar process. You can obtain a deed form from a real estate professional or use an online version. The crucial step is to sign the document in front of a notary. Once the deed has the necessary signatures from the grantor and grantee, it can be filed with the county recorder. It is important to ensure that all information on the deed is accurately and completely filled out before submission, as making changes after recording can be a complex process.
In conclusion, understanding what a quitclaim deed is and how it works is essential for real estate investors. While it can simplify the process of transferring property ownership, it offers less protection compared to other types of deeds. Knowing about quitclaim deeds allows investors to be prepared for any title issues that may arise when taking over a property. BiggerPockets forums are a valuable resource for learning more about deeds and their role in real estate transactions.
