Quitclaim deeds are commonly used when parents or relatives want to transfer title to property when no money is involved, such as in estate planning, family transfers, divorce settlements, and fixing title errors. Even though they seem to be popular, quitclaim deeds can frequently be a misused tool. Do-it-yourselfers seem to use this method of property transfer without really understanding the risks or proper application.
In one case, a family member wished to purchase a parcel of land but found that the selling relative had received ownership via a quitclaim deed without following county regulations for subdividing property. As a result, the relative had participated in an illegal segregation of land. The new buyer had researched the title issues and discovered that the parcel was flagged and could never be legally sold on its own without an adjoining parcel, owned by someone else, going with the sale. Since the adjoining owner did not wish to sell, the deal was considered dead.
A warranty deed carries a lot more legal weight than a quitclaim deed and is generally a better choice, especially for a buyer. A warranty deed provides assurances to the buyer that the seller has good title to the property and will defend against certain claims to the title, subject to the deed’s terms.
A quitclaim deed, on the other hand, makes no promises about the quality of the title. A quitclaim deed essentially says, “Whatever interest I have in this property, if any, I give to you.” It does not guarantee that the title is free of defects. Buyers may face issues involving outstanding debts, liens, or other claims against the property.
If you are a buyer, a warranty deed is generally more favorable because it provides greater legal protection. In a typical do-it-yourself property transfer, parties sometimes skip an important step out of ignorance or simply to save money. That mistake is failing to obtain a title search and purchase title insurance. Even though a quitclaim deed may seem like a seamless way to transfer title, it generally offers the recipient less protection regarding the title than a warranty deed.
A quitclaim deed is often used to release or transfer an interest in property, such as when a married person wishes to purchase property as their “sole and separate” property without the other spouse acquiring an interest. This scenario can arise when a divorce is pending and one spouse wishes to purchase a new home before the divorce is finalized.
Both types of deeds require important information, such as a legal description, proper documentation, clear language conveying the interest, and the necessary signatures. Both must be in writing and satisfy applicable legal requirements to be valid.