When selling your property, there are many terms you’ll need to be familiar with – the real estate term “quitclaim deed” may be one of them. If you can think back to when you purchased your property, you received a deed after signing a bunch of forms during closing.
While there are many types of deeds, a quitclaim deed is used for certain types of transactions such as if you’re transferring properties between spouses or other family members. That’s because these types of deeds tend to shorten the closing process and may not even involve money.
So, what is a quitclaim deed and what do you need to know so that you’re as prepared as possible when getting ready to move out of your property?
What Is A Quitclaim Deed?
A quitclaim deed can be one of the simplest methods of transferring a property to a new owner. In other words, the property owner (also known as the grantor) can offer this type of deed and transfer the entire interest in the property to the recipient, or the grantee. Generally, no money is involved in this transaction, there’s no need for title insurance and no title search is conducted to verify the property owner.
Whereas a general or even a special warranty deed offers some protection for the grantee, the quitclaim deed offers the property “as-is.” What this means is that there aren’t any warranties such as claims that the title is free and clear of restrictions or liens.
What Is A Quitclaim Deed Used For?
The quitclaim deed is useful for different purposes: transferring property between family members, removing a name from a property title and clearing a title defect.
Transferring Property Between Family Members
This is one of the most popular ways to transfer property to family members since no money is involved and both parties trust each other. For example, your elder parents want to transfer their property to you, or your brother decides to divide up his portion and give you some of it. Some choose to place their real estate property in a family trust, so a quitclaim deed is a legal document that can be used in this scenario when it’s transferred to the future owner.
Quitclaim deeds are most often used to transfer property between family members. Examples include when an owner gets married and wants to add a spouse’s name to the title or deed, or when the owners get divorced and one spouse’s name is removed from the title or deed. In other cases, a quitclaim deed can be used when parents transfer property to their children or when siblings transfer property to each other.
Removing An Ex-Spouse From A Property Title
In the event of a divorce, grantors can remove their ex-spouse’s name from the property deed or title. A title insurance company may want to ensure that the potential owner (in this case an ex-spouse) doesn’t try to claim ownership in the future.
However, both you and your ex-spouse will continue to have your name on the mortgage even if you file a quitclaim deed.
Clearing A Title Defect
Perhaps you found out that there’s a cloud on the title. What this means is there is an unreleased lien, claim, or document which could make the property title seem invalid. In this case, you can initiate a quitclaim deed which will release the interest in the property so that you’ve essentially cleared your title.
Some examples of a cloud on a title include a foreclosed property where the owner who defaulted on their mortgage might have claims to their home or there are probate issues. That is, documents could be lost over time which can raise questions about who legally owns the property.
What Are The Limitations Of A Quitclaim Deed?
While a quitclaim deed can be a quick and easy way to transfer property, it’s not always the best option. First, this type of deed doesn’t guarantee that there aren’t liens or interests that could affect the property. If you find out that there are other owners of the property, there could be legal and financial implications.
In some states, transferring the title to a new owner can trigger tax payments, even if you’re simply gifting property to someone. This is where it’s best to consult a real estate professional to see whether a quitclaim deed is the best choice or whether you can add verbiage that can exempt the grantee from the transfer tax.
What Is A Quitclaim Deed Form?
A quitclaim deed form is a legal document that puts in writing that the grantor releases their ownership rights of a property to the grantee. Typically, these forms will have the grantor and grantee’s name, the legal description of the property, how much is being paid for the property (also known as the consideration), the parcel number (assigned by your local tax assessor), the person preparing the document, any witnesses overseeing signing of the document and the notary public’s signature.
You can typically find free templates online – though to be sure you can consult an attorney before signing the form to ensure it has all necessary information and is appropriately formatted in your area. Once complete, you’ll need to register it with the county clerk’s or county recorder’s office. In addition to consulting a legal professional, it’s also a good idea to check with your local county office to make sure you’ve complied with their rules and regulations.
Once the quitclaim deed is signed by the grantor and accepted by the grantee, it’s considered legal and effective. However, some counties in the U.S. require that the grantee sign as well – again, at your local office.
Should You Get A Quitclaim Deed?
A quitclaim deed can be the most effective way to transfer property, remove a grantor’s name or fix a cloud on the current title. If you’ve carefully assessed your options, and it makes sense to do so, then you’ll want to ensure that all steps are taken care of when filling out and filing your deed. However, if you’re transferring to or receiving property from someone you don’t trust completely, you might want to reconsider – it could prevent headaches in the future.
Whatever your situation is, speaking with a home loan expert can help give you insight into which is the best course of action.