When it comes to owning property, we pretty much know the drill: find the property, get it financed with a loan, sign a general or special warranty deed and then it’s yours.
But not all property transfers happen this way. Inheritance, a special trade between two parties, is a type of property transfer that doesn’t follow the usual routine.
Enter: the quitclaim deed. Quitclaim deeds are used to quickly transfer ownership of real property from one person to another, typically in situations of nontraditional sales. They’re usually used by people who know each other well, like parents, siblings or other relatives.
Curious if this type of deed is right for your situation? Here’s what you need to know before signing one.
What Is a Quitclaim Deed?
A quitclaim deed is a legal document used to make a straightforward transfer of a property between two parties. Unlike a conventional sale and purchase, there’s usually no title search, payment or mortgage involved.
It’s kind of like wrapping a house with a beautiful red bow and handing it to someone you know.
While a quitclaim streamlines the property transfer process, it also comes with risks. So, it’s normally used between people who know and trust each other.
How Quitclaim Deeds Work
A quitclaim deed involves two parties. The parties can be people, corporations or entities. The party that’s transferring their ownership interest is the “grantor.” The party that’s receiving the ownership interest is the “grantee.”
Grantors typically use a quitclaim deed to give up all or some of their ownership rights to a home or piece of land. Essentially, they “quit” their claim on the property.
But, spoiler alert, the quitclaim deed may not grant you ownership. There are quitclaim deed loopholes.
Quitclaim deeds don’t include a title search or title insurance that confirms the grantor has rights to the property in the first place.
Since there are no warranties regarding ownership, you should only enter a quitclaim deed with someone you know.
Quitclaims aren’t a good approach for a traditional real estate sale where a buyer is dropping a large amount of money on an unfamiliar home. But, when it comes to property from your parents, siblings or other members of your family, it’s pretty straightforward. There’s a lower risk if you know both the grantor and the property pretty well.
When Is a Quitclaim Deed Used?
Here are some scenarios where a quitclaim deed might come into play:
- Transferring property between family members: Maybe your parents are downsizing and they want you to own your childhood home. Maybe you’ve landed a fabulous job abroad and you want to give your condo to a sibling. A quitclaim deed officially transfers ownership rights without expensive and time-consuming litigation.
- Adding a spouse to the title of a property (interspousal transfer): If you get married (congratulations!), a quitclaim deed lets you add your one-and-only to the property deed of your home. The two of you become joint owners, and the quitclaim deed replaces your original deed.
- Removing a spouse from the title of a property: A quitclaim deed can also terminate ownership rights. For example, when a couple is dividing assets during a divorce, they can use a quitclaim deed to indicate who gets the house. One spouse gives up rights to the property, and the other becomes the sole property owner.
- Correcting minor errors: Mistakes happen, but if they occur on a property deed, you can’t just hit delete. A quitclaim deed can fix any typos or spelling errors in a name or a problem with the legal description of the property.
- Placing a property in trust: A quitclaim can be used to transfer ownership of a piece of property into a living trust. A living trust allows someone to transfer assets to another person before they die. This lets them avoid probate, a legal process for transferring property after death.
- Resolving title issues: Sometimes a property title can get muddled. There may be heirs or owners no one knew about, or someone got included on the title by mistake. To “clean up” the title, anyone who’s not supposed to be on it can let go of their ownership rights using a quitclaim deed.
What’s the Difference Between a Quitclaim Deed and a Warranty Deed?
Promises, promises, promises. Calvin Harris, Sam Smith and Christopher Willams make a lot of them, but quitclaim deeds don’t.
Unlike quitclaim deeds, with a warranty deed, you’re assured that:
- The grantor really owns the property and has the right to sell it.
- There are no claims or encumbrances on the property (think: all property taxes have been paid and there are no liens).
Types of warranty deeds
There are two types of warranty deeds: general warranty deeds and special warranty deeds. The difference between the two is the buyer’s level of protection:
- General warranty deed: This deed offers the most protection. The grantor promises no one has a claim on the property, including from before they took ownership. A general warranty deed gives lenders confidence to approve a mortgage.
- Special warranty deed: This deed offers limited protection. The grantor promises that claims haven’t been made during the time they owned the property. Any problems that existed before they took over the title become the responsibility of the new owner.
What Information Does a Quitclaim Deed Contain?
The standards of a lawful quitclaim deed vary depending on which state you live in. For example, the format of a New York quitclaim deed form may be slightly different than a quitclaim deed in California.
Individual counties may have specific requirements, but generally, you must include:
- The name of the person transferring their ownership interest (aka the grantor)
- The name of the person receiving the ownership interest (aka the grantee)
- A legal description of the property (which may include a parcel number and the county where the property is located)
- Consideration (the amount paid for the property, even if it’s only $1)
- The name of the person who prepared the document
- The signature of the grantor (and in some states, the grantee)
- Witness signatures
Once the quitclaim is signed, file it with your county clerk or local authority responsible for land so it’s on the public record. Most states require this step before the deed is considered valid.
You can find just about everything on the internet, including a template for a quitclaim deed. You can fill in the form or draft one based on a template, but it’s always good practice to chat with a lawyer first.
An attorney can flag any missing information and point out details related to your specific situation. At the very least, check with your county clerk for their quitclaim deed filing requirements.
Facts About Quitclaim Deeds To Consider
While quitclaim deeds are a fast way to move property between two parties, they require a high degree of trust. Unlike special or general warranty deeds, there’s no guarantee that the title of the property is clear.
Before putting pen to paper, make sure you’re comfortable with the level of risk you’re assuming and seek legal advice if needed.
Remember: Quitclaim deeds are not mortgages. Even if your name is removed from a property deed, you still must repay your mortgage loan.
FAQ – Frequently Asked Questions
How do I file a quitclaim?
To file a quitclaim deed, you’ll first need to obtain and fill out a quitclaim deed form. Templates can be found online, however, the form requirements vary depending on which state you’re in. Consider consulting with an attorney to ensure all the necessary information is filled in correctly. Once the quitclaim is notarized, file it with your county clerk or local authority.
Can you quitclaim deed a house with a mortgage?
A quitclaim deed only affects the title of a property. If you have a mortgage, you’re still responsible for paying it back even if you gave up ownership.
During a divorce settlement, couples can use a quitclaim deed to remove one spouse’s name from the property deed. However, the mortgage must be handled separately with the lender. Anyone whose name stays on the loan remains responsible for mortgage payments.
Can a quitclaim deed be challenged?
Unless you can prove in court the transfer resulted from fraud or other illegal influence, a quitclaim deed cannot be reversed or overturned. If you believe there is suspicion of forgery, undue influence or questions about the mental capacity of one party during the exchange, you should consult with an attorney about how to legally challenge the deed.
Does a quitclaim deed affect your credit?
A quitclaim deed does not automatically release you from the mortgage loan associated with the property. Until the original owner is officially released from the mortgage, that individual is still on the hook for payments and missed payments could affect their credit.
To Deed or Not To Deed
There’s a deed for everything – you just have to choose the one that’s right for your situation. Do you need a quitclaim deed for a simple property transfer or a warranty deed to help you sleep better at night?
Spend a little time understanding the type of deed you’re signing and how it works so your real estate transaction can proceed smoothly.