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Home Resources Real Estate Repercussions of a Quitclaim Deed

Repercussions of a Quitclaim Deed

A quitclaim deed makes property transfer easy, but the risks involved are high. Learn about these risks and what you could use instead.

Jana Freer

Updated September 20, 2023 | Written by Jana Freer
Reviewed by Susan Chai, Esq.

A Quitclaim Deed is a legal document used to quickly transfer ownership of real estate during a homebuying process, from an owner or seller (the “grantor”) to another person or party (the “grantee”).

However, quitclaim deeds include no protections or guarantees for the buyer. This means the buyer will only ever get what the seller owns, which may be nothing.

In this post, we’ll delve into the key repercussions of a quitclaim deed to help you make informed decisions regarding property transfers.

Table of Contents
  • What is the Purpose of a Quitclaim Deed?
  • Repercussions of a Quitclaim Deed
  • Summary

What is the Purpose of a Quitclaim Deed?

A quitclaim is used when a name has to be added or removed from ownership, or no sale (transfer of money) is involved in the property changing hands. Here are some of the most common uses:

  • Transferring real estate within a family
  • Changing ownership after a divorce or marriage
  • Correcting property title issues or defects
  • Moving property into trusts and estates
  • Moving Property into Business Entities

Because quitclaim deeds don’t guarantee the seller has a full property ownership interest, buyers and sellers often use warranty deeds to transfer property.

Knowing the differences between these and other deeds can protect you from risky property transactions.

Repercussions of a Quitclaim Deed

While a quitclaim deed can be effective in certain situations, it’s crucial to understand the potential repercussions that accompany its use.

Lack of Warranty Protection

One of the significant repercussions of a quitclaim deed is the absence of warranty protection.

Unlike warranty deeds, which guarantee that the grantor has legitimate ownership and that there are no liens or encumbrances on the property, quitclaim deeds offer no such assurances.

As such, grantees must assume all risks related to the property’s title, including any hidden liens or legal issues.

Potential Title Issues

Due to the lack of a thorough title search or title insurance associated with quitclaim deeds, there is an increased risk of undiscovered title issues.

This means the grantee may be responsible for addressing any existing liens, mortgages, or other claims on the property. It could potentially lead to unanticipated financial obligations or legal disputes for the grantee if any liens, mortgages, or other claims exist on the property.

Therefore, it is imperative to complete due diligence before accepting property through a quitclaim deed.

Inadequate Protection for Grantees

Although a quitclaim deed allows the grantor to transfer their interest in the property, the grantee receives little protection from it. The grantee may have some limited legal remedy against the grantor in cases of disagreements or title problems involving the property.

Quitclaim deeds are less suitable for real estate purchases because of this lack of security; warranty deeds are often favored because of their extensive promises.

Mortgage and Financial Obligations

Transferring property through a quitclaim deed does not absolve the grantor of any existing mortgage or financial obligations tied to the property. Any unpaid loans or debts related to the property still fall under the grantor’s control following the transfer.

Both parties must properly communicate these commitments to prevent issues or misunderstandings throughout the transfer process.

Family and Relationship Dynamics

Quitclaim deeds are often used in family-related transfers or between parties with a certain level of trust. However, these transactions can have significant repercussions on family dynamics and relationships.

Conflicts can arise when a family transfers property ownership, especially if there are questions about the impact on finances or ownership.

To reduce any repercussions, it’s crucial to approach such transactions with open communication, openness, and legal counsel.

Summary

Before using a quitclaim deed, know the possible risks and safer alternatives:

  • Use a Quitclaim Deed to transfer property to a family member or trusted friend.
  • Use a Warranty Deed if you’re looking for real estate sales involving strangers.
Jana Freer

Jana Freer

Real Estate Editor

Jana Freer is a Real Estate Editor with Legal Templates, where she creates and edits legal form descriptions and articles to help landlords and tenants better understand real estate processes. She...

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In This Article

  • What is the Purpose of a Quitclaim Deed?
  • Repercussions of a Quitclaim Deed
  • Summary

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