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 that the buyer will only ever get what the seller owns, which may be nothing.
What is the Purpose of a Quitclaim Deed?
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.
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 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
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
A title defect, or cloud on title, is anything that weakens the right to a property, whether it’s a lien, a mortgage, or another claim.
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.
Types of Deeds
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.
As a safer alternative, warranty deeds hold the grantor accountable for any obstacles the grantee faces, such as mortgages, existing liens (a hold for unpaid debt), or other claims on the property.
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 |
Quitclaim Deed vs. Grant Deed
A grant deed, also called a special warranty deed or limited warranty deed, transfers property between an owner (the grantor) and a new owner.
Unlike quitclaim deeds that parties typically use to transfer real estate between family members, grant deeds are typically appropriate in arms-length transactions involving non-related parties.
What to Do with Challenges to Quitclaim Deeds
There are many reasons a party might challenge a quitclaim deed in court.
A person might say the grantor’s signature is invalid, for instance if someone forged it.
Remember that once you or the other party record a quitclaim deed in a county clerk’s office, it is difficult to challenge it.
The property transfer is complete at this time, so the challenger holds the burden of proof to show any reasons the deed is invalid. Anyone facing a quitclaim challenge should speak with a real estate attorney.
Your legal counsel will likely want you to provide any proof you have regarding the lack of validity of the quitclaim deed.
Some types of proof you should come to your attorney with, based on whether you or someone else challenges the deed, include:
- Letters or emails that show the grantor’s intent
- Third parties who can testify they witnessed the deed’s execution
- The deed that transferred property ownership to the grantor
- A copy of the quitclaim deed with the recorder’s or county clerk’s stamp or seal
Summary
Before using a quitclaim deed, ensure you know the possible risks and safer alternatives.
In general:
- 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.
Use our document builder to easily create a quitclaim deed or other legal forms you might need during the homebuying process, such as a Deed of Trust or Mortgage 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 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 the title.
