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When to Use a Quitclaim Deed (And Why You’d Want to in the First Place)

October 25 2018
by Leisl Bailey

Older couple meeting with real estate agent about quitclaim deed.

A deed is a legal document used to transfer ownership of a property. There are many different types of deeds. Here, we will cover everything you need to know about signing or using a type called a quitclaim deed.

What is a quitclaim deed?

When transferring ownership of real property, there are three main types of deeds.

  • General warranty deed
  • Special warranty deed
  • Quitclaim deed

The main difference between these types of deeds is the guarantees. These are what the grantor (the person selling the property) gives to the grantee (the person purchasing the property). As the names might suggest, general and special warranty deeds both include warranties about the purchased property.

Typically, these warranties ensure the grantor actually owns the title to the property. This gives them the legal right to sell it. They also ensure that if anyone else shows interest in the property, perhaps by claiming they actually own it or a portion of it, the grantor will fight back against these claims to the property.

While the coverage between a general and special warranty deed varies, the thing about a quitclaim deed is that it does not offer any coverage.

When would you use a quitclaim deed?

When a granter issues a quitclaim deed form, they are simply “quitting” any hold that they had on a certain piece of property. There are no promises or guarantees attached. So, if the grantor of the deed didn’t actually hold the title to the property, then, unfortunately, the grantee does not receive anything.

However, this is not always a bad thing. Quitclaims have a useful and defined purpose in real estate. Otherwise, they wouldn’t exist.

When two people who already know and trust each other transfer a property between them, they often use a quitclaim deed. This is because family members, business partners, or close friends might not need all the guarantees of warranty deeds. This is especially true if they would simply like to transfer the property into a living trust.

Quitclaim deeds are also particularly popular for former couples dividing up assets after a divorce. This is because both parties are already completely aware of the property’s ownership. They don’t need to do a title search or be guaranteed anything—they just need to transfer it.

This is an important distinction to make. Grantors usually give a quitclaim deed when they are simply transferring their property to someone else, not when they are selling it.

How does a quitclaim deed work?

Quitclaim deeds are completely legal. Yet they are best used when a property owner would simply like to transfer their property as a gift to family or friends or into a trust. This is because there is an element of trust involved in accepting a quitclaim deed.

If one party refuses to sign a quitclaim deed, then it is best to proceed using a general warranty deed or a special warranty deed. This is an especially good idea if either party has reservations about using a quitclaim deed. This is because the only way a quitclaim deed can be officially canceled is if it has not been legally executed.

However, in a pinch, you can technically reverse the first transaction by completing a new one, but in reverse.

Can you use a quitclaim deed on a mortgaged home?

One of the biggest concerns surrounding quitclaim deeds is, “Can you quitclaim a deed with a mortgage?” The answer is typically no. If your home has a mortgage, then you are better off using a general or special warranty deed.

This is because people tend to use quitclaim deeds when they are simply transferring ownership or a property, rather than selling it. If you are selling your property, even to a close friend or family member, you need to offer them a deed with guarantees.

However, like in most things in real estate, there is always an exception. Just because people do not typically use quitclaim deeds on properties with mortgages, it does not mean that is it illegal or impossible.

The only thing to remember is that quitclaim deeds do not impact the mortgage of a home. As the deeds offer no protections or guarantees, whoever was originally responsible for the mortgage will continue to be legally responsible for the mortgage until it is paid off.

There is only one reason this would be different. It is if the new owner of the property legally agreed to be responsible for it by signing a mortgage assumption agreement. If this happens, the quitclaim deed will not impact your credit.

Final Thoughts on Quitclaim Deeds

Remember, this article is for informational purposes only.

Before using a quitclaim deed to transfer property to a family member, or anyone else with ownership interest, you should always consult with a qualified lawyer or real estate professional.

Always make sure you have title insurance and are aware of what your deed conveys.

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Interested in talking over quitclaim deeds with a qualified professional? The team at Clever is here to help you understand what path is right for you. All for just one flat fee. Call us today at   1-833-2-CLEVER or fill out our online form to get started.