Understanding Quitclaim Deeds: A Guide to Property Transfers

Find Out What They Are and How They Work

As life changes, you may need to update your home's title. Whether through marriage, divorce, or estate planning, you'll have options to make these changes. A quitclaim deed is one of the fastest ways to transfer ownership. It's important to understand how a quitclaim deed works and the potential risks involved, so keep reading to learn more.

What Is a Quitclaim Deed?

A quitclaim deed provides a legal way to transfer a person's ownership of property to another party, such as family members or a spouse. Two parties are involved in the process: the grantor (the person transferring the property) and the grantee (the person receiving the property).

Quitclaim Deed vs. Warranty Deed

A quitclaim deed and a warranty deed are both used when transferring property from one owner to another, but they're used in different situations:

• Quitclaim deed: You'll usually see a quitclaim deed used in transfers within a family or for correcting deed information. It also carries some risk, offering no guarantees and limited protection.
• Warranty deed: This deed is standard in most traditional real estate sales. It carries less risk than a quitclaim deed, as it guarantees a valid title free of liens or hidden defects.

Common Reasons to Use a Quitclaim Deed

There are several reasons you might use a quitclaim deed, including:

• Gifting a house to a family member: If a parent wants to give their child a home, they can file a quitclaim deed with the county clerk or their county's equivalent.
• Adding or removing a person: After a marriage, you can file a quitclaim deed to add your spouse to the deed. You can also remove a person from the deed after a divorce or death.
• Transferring the house: You can use a quitclaim deed to transfer the property to a trust as part of estate planning, simplifying inheritance for your heirs.
• Correcting errors: You can file a quitclaim deed to fix spelling mistakes or other errors in a property title.

How to File a Quitclaim Deed

The filing process for a quitclaim deed can be broken down into four steps:

1. Get the specific quitclaim form: You'll need to get the correct form from the county where the property is located. The county clerk or recorder will have it, and you can also get it from some online retailers.
2. Fill out the deed accurately: Include the exact legal description from the prior deed, the full legal names of the grantor and grantee, and the property's parcel ID number if your county requires it. Record the amount paid, which can be $0 for gifts, but might be $1 to $10 to meet legal requirements.
3. Notarization and signing: As the grantor, you must bring the deed to a notary and sign in their presence. This step verifies your identity and ensures you sign voluntarily, which minimizes risk of fraud.
4. Record the deed: After signing, the grantee typically takes the notarized and signed deed to the local recording office and pays any associated fees and taxes.

Risks and Limitations of Quitclaim Deeds

Quitclaim deeds have specific limitations and risks, including:

• No title protections or guarantees: When you accept the property through a quitclaim deed, you take ownership "as-is." This means you accept any title defects or disputes, and you have no protection or legal remedy from the grantor if issues arise.
• Mortgage responsibilities: A quitclaim deed does not affect any existing mortgage attached to the property. The grantor remains responsible for the mortgage payments until the loan is refinanced or the lender releases the grantor from the obligation, even if ownership has been transferred. However, a quitclaim deed may trigger a "due-on-sale" clause, depending on the loan terms. This would require immediate repayment of the mortgage in full.
• Unknown financial liabilities: The grantee could inherit outstanding property taxes or other liens, including those from contractors.
• Tax implications: When you use a quitclaim deed, the transfer may be considered a gift, making the grantor potentially responsible for gift taxes and the grantee responsible for future capital gains tax if the property is later sold at a profit.

Because of these potential legal, financial, and tax risks, it is essential to speak with a real estate attorney before signing a quitclaim deed to understand the full scope of possible consequences.

Property Quitclaim Deed FAQs

Quitclaim deeds often prompt questions for both grantors and grantees. Here are common questions about quitclaim deeds.

Does a Quitclaim Deed Expire?

No, a properly filed quitclaim deed does not expire. This means that if there are errors,, they could create complications, including disputes over ownership with other parties. It's very important to ensure you execute a quitclaim carefully.

Can You Sell a House with a Quitclaim Deed?

You can sell a house using a quitclaim deed, but it's generally not recommended for traditional sales. Selling through a quitclaim poses substantial risk to the buyer because it lacks the protections of a standard sale.

Can a Quitclaim Deed Be Challenged in Court?

Quitclaim deeds are typically irrevocable but can still be challenged in court. Courts generally review cases involving fraud, coercion, forgery, or procedural mistakes.

Does a Quitclaim Deed Remove You from the Mortgage?

No, a quitclaim deed transfers ownership, and the mortgage is a separate financial contract. Only when the grantee refinances or assumes the mortgage will your obligation end.

Final Thoughts: What Is a Quitclaim Deed?

A quitclaim deed usually transfers a property's title to a family member or spouse as opposed to a typical buyer, but it carries risks you should understand before signing. Follow all procedures and local laws closely to avoid property disputes or legal complications. To further explore property law nuances, see our article on the differences between a deed and a title.