What Is A Quitclaim Deed & When Should It Be Used?
|A quitclaim deed is the simplest type of real estate transfer deed, in which the owner of a piece of real estate (the grantor) merely releases ("quits") all claims of ownership and transfers their ownership to a grantee. |
The quitclaim deed does not make any guarantees whatsoever about the property - the grantor simply washes their hands of it and passes their ownership interest (if any even exists) to the grantee.
What Is Included?
There are surprisingly few details listed in a quitclaim deed. The details of the two parties, the grantor and the grantee, are of course included, along with the consideration. The consideration is what is being offered by the grantee in exchange for the ownership of the property - this is most often money, but it can be anything: a prized baseball card, custody of a pet or even something intangible like "love and affection."
The other critical component to a quitclaim deed is the legal description of the real property. A legal description is a lengthy description of the property's boundaries that conforms with local legal requirements, and can be found on the original deed from when the property was purchased. If lost, the deed can usually be found among the public records of the local courthouse or even online.
Pros & Cons of Quitclaim Deeds
There are many pros, and one giant con, to using quitclaim deeds. The drawback, quite simply, is that quitclaim deeds offer the grantee/recipient no protection or guarantees whatsoever about the property or their ownership of it. Maybe the grantor did not own the property at all, or maybe they only had partial ownership. There could be liens that have been placed against the property such as for unpaid mortgages, utilities, or taxes. Easements or deed restrictions could restrict use of the property, and may not be disclosed in a quitclaim deed. Perhaps there is a cloud on the title, leaving the ownership uncertain and the possibility of a lawsuit to settle who actually owns the property.
So what are the advantages?
First and foremost, cost. Title companies routinely charge $1,000-2,000 for a real estate settlement, which may be unnecessary for informal transfers of ownership. Beyond cost, title searches take time and can bring other delays and hassles with them. For example, the title company generally requires any attached judgments and debts to be paid off, which may not be desirable. Probate court may be avoidable, in some instances, through a combination of trusts and quitclaim deeds.
When Is a Quitclaim Deed Useful?
There are many situations where transferring ownership of real estate this way may be appropriate, usually in less formal transfers of ownership where the parties know one another and are less concerned with the title history than they are with speed and cost. Someone may wish to transfer a property they own under their personal name to a company name (for tax or asset protection purposes), a simple change in legal/technical ownership.
A family member may quitclaim their ownership interest to another family member, to facilitate the closure of family finances (e.g. two siblings inherit a rental property, and one is not interested in it, so she signs a quitclaim deed to her brother who is). It is also commonly used in marriage and divorce situations, to enable one spouse to inexpensively transfer their ownership interest to the other.
Ultimately, quitclaim deeds make it possible to quickly, quietly and cheaply transfer all or part of a property's ownership from one person/company to another, which can be useful for atypical real estate transactions. If the grantee is at all concerned with the cleanliness of the title history, they should not accept a quitclaim deed, and should instead hire a title company to perform a title search and insure the clean title.
|Brian Davis is a seasoned landlord and marketing professional. As Vice President of online company EZLandlordForms, Brian Davis works to empower landlords and property managers across the United States with valuable information and documents to support their work. |
Brian, with over a dozen rental properties of his own, understands what it takes to be an effective landlord through first-hand experience.
Mr. Brian Davis graduated cum laude from University of Delaware's Honors Program, with a degree in Psychology and a degree in Criminal Justice. From 2003-2006 he managed the Real Estate Department for Bay Capital Corporation, a national mortgage lender. From 2006-2008 he served as an account executive and property inspector, overseeing the renovation of dozens of properties for a private lending company. He joined EZLandlordForms in 2008.
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