A quitclaim deed is a document that transfers property ownership from the seller, the grantor, to the other party, the grantee, without any guarantee of legal protection if the title has defects. Creating this document involves filling out crucial information and having the deed signed and notarized.
Besides the quitclaim deed, there are two other forms used for this purpose: the warranty deed and the grant deed. Each type differs in the guarantees the grantor provides to the grantee. In this article, we will explore questions like “What is a quitclaim deed used for?” and “What is a quitclaim deed in real estate?” so keep reading to learn the answers and more.
Quitclaim Deed vs. Warranty Deed
A quitclaim deed and a warranty deed are the types of deeds that transfer ownership of the property, but they offer different levels of legal protection and warranties for the buyer.
With a quitclaim deed, the grantor transfers their legal interest in the property to the grantee. Still, the main quitclaim deed disadvantages are that there are no guarantees that the grantor owns the property or that there aren’t any third-party claims.
This makes a quitclaim deed riskier because the grantee might not have legal protection if any issues arise with the property. The repercussions of a quitclaim deed could lead to the loss of property and financial losses that can’t be recovered because the grantee accepted the risk that goes with this type of transfer.
On the other hand, a warranty deed is more commonly used in real estate transactions, especially between people who aren’t closely related, because it provides more security and legal protection.
This deed type guarantees that the seller is the valid property owner with the right to sell it and that the property hasn’t been sold to anyone else previously. It also states that there are no third-party claims, demands, or rights on the property and that it isn’t burdened by a mortgage or other hidden issues.
Therefore, the grantee can be assured that the property they purchased is free of any possible legal issues. Additionally, if any third-party claims arise regarding the property, the grantor will be obligated to provide legal assistance to defend against those claims.
When Should You Use a Quitclaim Deed?
A quitclaim deed should be used when there is mutual trust between the buyer and the seller, making the grantee willing to accept the title transfer with a quitclaim deed. It is also suitable when the parties want to avoid formalities associated with other property transfers and deed types, as it is the simplest transfer method.
Specifically, using a quitclaim deed is ideal in situations such as:
Transferring property among family members
When spouses want to add the name of the spouse who was not previously listed on the title
In cases of divorce, when a spouse wishes to remove the name of a spouse who is leaving the property
When owners simply want to correct errors in the existing title without formal procedures
However, using a quitclaim deed for real estate purchases should be avoided. Such transactions typically require a significantly higher level of security and guarantees, which a quitclaim deed cannot provide, and this is one of the main disadvantages of a quitclaim deed.
What Information Needs to Be Included in a Quitclaim Deed?
Information that needs to be included in a quitclaim deed is all the specific details regarding the transfer of property ownership, such as:
Identification of Parties
This section should contain all essential information about the parties, like their identification data and location. It includes the following:
Names
Addresses
ID numbers
Marital status
Contact information (phone number/email)
If one of the parties is a legal entity, the data will include its business name, address, type of entity, and registration number.
Transaction Date
Transaction date is a vital element in the quitclaim deed because it indicates the moment when the transfer was agreed upon in the document. The transfer will be considered effective from this specified date.
Property Description
Property description requires utmost accuracy. This section contains all relevant information about the property being transferred, including its precise description, such as location, measurements, and condition, to name a few. All the property details can be sourced from the property title or previous grantor’s contracts or deeds.
Consideration
Consideration represents the value of the transferred property and generally includes the agreed-upon price for the transfer. If the transfer is without consideration (as a gift), this should also be stated in this section.
Limitations (if any)
This section is only completed if the parties agree that certain rights to the property are transferred with specific limitations, which should be clearly stated.
Signatures
Once the parties have mutually agreed on all details of the transfer, both parties sign the document in the presence of a notary public, from which point this document will bind them. Additionally, some states require signing the quitclaim deed in front of one or two witnesses.
How to Create a Quitclaim Deed
To create a quitclaim deed, you can follow this step-by-step guide:
#1. Negotiate the Terms of the Transfer
Before drafting the quitclaim deed document, the grantor and grantee should negotiate the contract and agree upon all essential elements of the specific transfer. This phase includes agreeing on aspects like the transaction date, condition, description, and price of the transferred property.
#2. Fill out the Quitclaim Deed Form
Once the negotiation phase is complete and both parties have reached an agreement, they can proceed to fill out the quitclaim deed form. Firstly, download a quitclaim deed template. This form includes sections about parties and property.
The “parties” section implies an identification process of acknowledging the legal status of the parties by giving details on their full names, ID numbers, addresses, and marital status.
On the other hand, the transaction section includes the transfer date and specifics about the transferred property, such as its location description (state, city, ZIP code, and address) and legal description.
Additionally, the consideration section of the form outlines the agreed-upon price for the property transfer. If the transfer is without consideration, this should be clearly stated in the document.
Once all sections of the form are completed, the parties print and sign the form.
#3. Notarize the Quitclaim Deed Form
The quitclaim deed form may need to be notarized for legal validity, depending on the state’s requirements. If required, the parties sign the form in the presence of a notary public, who will then acknowledge their signatures.
Some states also require the presence of one or two witnesses during the signing process.
#4. File the Quitclaim Deed Form
After the quitclaim deed is completed and notarized, it is filed with the local county recorder's office for legal validation and documentation.
3 Mistakes To Avoid When Creating and Using a Quitclaim Deed
While a quitclaim deed is an efficient and legally accepted method for transferring property ownership, the presence of quitclaim deed loopholes necessitates extra caution to prevent the most common mistakes, as follows:
Failure to Notarize
It often happens that parties believe that signing this document by both sides is sufficient as it expresses their agreement on all details of the transfer.
However, notarization by the competent authority provides legal validity to the document, alleviating the need to prove that they have indeed agreed to what is stated in the document.
Incomplete Data
Another common mistake is the incorrect or incomplete data in a quitclaim deed. This can significantly compromise the property transfer process, as it creates potential issues in providing the exact information about the parties involved, the transferred property, and the term of the transfer.
All this affects property individualization, the possibility of confusion in transactions, and legal uncertainty.
Failure to Record
One more mistake to avoid is failing to record a quitclaim deed properly. After the document is notarized, the parties may feel relieved of potential future issues. However, if the document is not recorded correctly, that means the transfer is not formally documented, which can lead to potential legal issues or challenges in the future.
Final Thoughts
A quitclaim deed is used to legally transfer property ownership, bypassing additional procedures and formalities. This legal document allows for the swift transfer of ownership from the seller to the buyer by providing the necessary transfer details and notarizing signatures.
It’s true that real estate transactions involve high-value properties and demand careful attention to security. However, if the parties involved are related or have a good relationship and are familiar with the property’s history, there’s no reason not to complete the transfer using a quitclaim deed and become the property’s legal owner.
