Quitclaim Deeds: A Useful Guide

The home buying process is usually chock-full of showings, offer letters, paperwork and occasional letdowns. But what if your path to homeownership involves inheriting property from a family member, sharing ownership with a spouse or partner, or simply fixing issues with the home’s title? In these situations, quitclaim deeds allow these transfers to occur with minimal hassle.

Quitclaim deeds are a quick way to transfer interest in real estate. However, homeowners don’t use them when selling their houses. The following information will help you decide if a quitclaim deed is right for your situation.

A quitclaim deed is a simple legal document that transfers a property’s title between two parties. Since a quitclaim deed transfers the title without any changes, legal protections for the grantee who receives the property are extremely limited.

A quitclaim deed facilitates a property transaction between a grantor and grantee. The grantor is who initially owns the property and sells it, and the grantee receives the deed of the property. A deed is a legal document that makes the transaction official and valid.

Technically you don’t even need an attorney to file a quitclaim deed, but it’s usually in your best interest to work with one so all parties understand the legal and financial repercussions.

Various deeds serve different purposes in property transactions. In most real estate transactions, you’ll use a warranty deed rather than a quitclaim deed.

Generally, warranty deeds provide more protection for the grantee than quitclaim deeds. They allow sellers to be confident that the transaction will go smoothly without financial responsibilities and issues encumbering the process. For example, if you want to buy a home, a warranty deed protects you from the previous owner’s unpaid property taxes. As a result, warranty deeds are the standard for real estate transactions.

Despite being unsuitable for the typical commercial or residential real estate transaction, quitclaim deeds can save time and money, allowing grantees to receive ownership without paying for title insurance. Quitclaim deeds are usually best suited for the following situations.

Transferring Property Between Family Members

You can transfer your interest in a property to a family member who understands the situation. For example, you may want to transfer the title of your house to your child without saddling them with a mortgage obligation. As a result, quitclaim deeds are helpful for gifting real estate.

Adding A Spouse’s Name To A Deed

If you acquire property before marriage, you may wish to add your spouse’s name to the property title after the wedding. Or you may decide to add your spouse’s name to the title after obtaining a mortgage without them due to credit concerns. A quitclaim deed can be a quick solution.

Transferring Property Between Spouses During A Divorce

When one spouse is keeping the house in a divorce, removing the other spouse’s name is an important step. A quitclaim deed is typically used in this scenario for a quick resolution.

Removing A Name From Your Mortgage And Deed

Homeowners looking to refinance might remove a credit-challenged spouse or co-owner from the deed and mortgage. This option allows the property owner to obtain better interest rates and terms when refinancing.

Transferring Property Interest To A Business Partner

If you’re in business with someone, it could be beneficial to have the title in their name at some point. Instead of a traditional sale of your interest in the property, a quitclaim deed allows for a smoother process. The servicing lender needs to be aware of the quitclaim to avoid any due-on-sale clauses that could create problems for all parties.

Fixing Title Errors

You can also use quitclaim deeds to fix title errors. For example, if your title has a mistake, such as a misspelled name or missing signature, you should consider a quitclaim deed to rectify it. You can correct the mistake without affecting your mortgage or ownership status. Removing defects to your title is vital because they can inhibit or prolong future property transactions.

Although details vary by state, quitclaim deeds must contain specific information to be considered legal. Most quitclaim deeds should:

• Identify the grantor, grantee and their addresses.
• List the property and define the transaction as a quitclaim.
• State that the grantee receives the ownership the grantor previously held.

Include the date and relevant signatures.

Have questions about quitclaim deeds? Here are some helpful answers to get you started. That said, you should always consult an attorney before signing any real estate agreement.

How soon does a quitclaim deed give you ownership?

As a rule, a quitclaim deed is considered legal and effective once it’s been signed by the grantor and accepted by the grantee. In some cases, the grantee may also need to sign. The deed also needs to be filed and recorded with the county clerk’s office as soon as possible. Otherwise the grantee may face challenges to their ownership.

How long is a quitclaim deed good for?

A quitclaim deed is considered a permanent transfer of ownership between the grantor and grantee, so there’s no limit to the term of ownership. However, new deeds need to be filed with the county for the transfer to be officially recorded.

Can I use a quitclaim deed to get out of my current mortgage?

Quitclaim deeds allow for quick property transactions, but they don’t protect grantors financially. For example, if you transfer a property using a quitclaim deed, you remain responsible for mortgages and liens against the property. As a result, grantors usually use quitclaim deeds to transfer property to trusted parties, like family members or business partners.

Do I need to tell my lender if I use a quitclaim deed?

Transacting a property using a quitclaim deed with a property that has an outstanding mortgage could trigger a lender’s due-on-sale clause. In that case, the grantor owes the unpaid mortgage despite the new ownership, so the lender needs to be informed prior to the quitclaim to avoid problems.

Quitclaim deeds transfer a grantor’s property rights to a grantee. They can facilitate transactions in various cases, including between family members or divorcing spouses. In addition, they’re helpful for fixing defects on your title.

However, because quitclaim deeds don’t guarantee the title is free and clear, they aren’t suitable for typical real estate transactions.

In short, quitclaim deeds are for transferring property – not buying a home. If you’re a potential home buyer, you can start the mortgage approval process today to see how much you may be able to borrow for a new home.