A Quitclaim Deed is a legal document used to quickly transfer ownership of real estate 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 that the buyer will only ever get what the seller owns, which may be nothing.
Because they don’t guarantee the seller has full property ownership, 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.
Read on to learn more, including the differences between this deed and a warranty deed.
What is a Quitclaim Deed Used For?
A quitclaim is appropriate 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 Family
Quitclaim deeds are most often used in moving real estate between family members. With the added benefit of trust, those transferring property to and from a relative can do so easily with this type of deed.
Changing Ownership After a Divorce or Marriage
Married or divorced couples can add to, or remove their names from, property ownership using a quitclaim deed.
But it’s not limited to just marital status—quitclaims help change names on a title for any reason.
Correcting Title Issues and Defects
Defective title to a property often includes claims on the property that lead to confusion about who currently owns the property legally. Using quitclaim deeds to remove unwanted names (or spelling errors) helps avoid legal risks in the future.
Title insurance companies also use this method to fix any breaks in the chain of title.
Moving Property into Trusts and Estates
Quitclaim deeds offer a simple way for family members to transfer names into a trust. Since no money or strangers play in this exchange, it is a common way to manage estates.
Moving Property into Business Entities
Individuals looking to better protect themselves through business entities like an LLC (limited liability company) or a parent company relocating property to subsidiaries can use quitclaim deeds for a more straightforward title transfer.
Giving ownership of real property to a corporation also works the same way.
Quitclaim Deed vs Warranty Deed
The main difference between two of the most common types of deeds is quitclaim deed does not guarantee that the grantor owns the property. A warranty deed, however, does state that the grantor has legal ownership of the property.
Quitclaim deeds also don’t protect the grantee (buyer) from any other claim or liability the property might have.
By extension, a general warranty deed protects the grantee from any defect in the property’s entire history. Quitclaim deeds offer no promise of ownership, so they do not clear the property of defects for any period.
Finally, warranty deeds are appropriate when large monetary transactions are involved, whereas quitclaim deeds are perfect when little or no money is involved (e.g., transfers between family members).
Quitclaim and warranty deeds differ in the following important ways:
|Quitclaim Deed||Warranty Deed|
|Offers no warranty||Offers warranty that covers all defects|
|Title defects not cleared||Clears title defects|
|Typically used when ownership changes, but without a sale||Used to buy and sell property|
Before using a quitclaim deed, ensure you know the possible risks and safer alternatives.
- Use a quitclaim deed if you want to transfer property to a family member or trusted friend.
- For real estate sales involving strangers, look into warranty deeds instead.
Quitclaim Deed Frequently Asked Questions
How long is a quitclaim deed good for?
Quitclaim deeds transfer ownership rights ‘for all time,’ but the parties to the deed have a time period after execution in which either can challenge the validity of the deed. After that time, a statute of limitations goes into effect and the parties may no longer contest the deed.
Does a quitclaim deed need to be notarized?
Yes, quitclaim deeds need to be notarized to be considered executed. Additionally, some states require witness signatures.
Does a Quitclaim Deed Affect Taxes?
Quitclaim deeds do not relieve the grantor of tax obligations. Grantors who owe taxes during the period in which they owned the property legally must pay the tax prior to the execution of the deed. Additionally, they must pay any tax liens on the property before they can transfer title.