You’ve been searching for houses for months and finally found the one you like. After making your way through the homebuying process, one of the final steps is ordering a title search and then have the seller execute the deed to the property at closing. This step legalizes the transfer of property ownership. Warranty deeds are most common in these transactions, but some home sellers might use a quitclaim deed. So what is a quitclaim deed?
Before learning about quitclaim deeds, it’s important to know what a property deed is and what they do. Whether you’re a first-time homebuyer in Chicago, IL, or you’re selling your home in San Francisco, CA, read on to learn about property deeds and when to use them.
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What is a real estate/property deed?
Real estate deeds and property deeds are physical, legal real estate documents used in real estate transactions. They legally transfer ownership (interest) of real property from the current property owner/seller (the grantor) to a new owner/purchaser (the grantee). Typically prepared by a mortgage company, title company, or real estate lawyer, a deed contains a written legal description of the property and its boundaries and identifies the grantor and grantee parties.
A deed must be in writing, prepared properly, and executed by the grantor to be legal and submitted for public record. People use different types of deeds depending on the circumstances of the property transfer. When a grantee uses a title company to conduct their closing on a purchase of real property, the company runs a title report. This report ensures that the seller has good title to the property. The company can then choose to insure the grantee’s title to the property. Insurance protects the grantee against certain claims or disputes that may arise relating to the ownership, physical, or financial interest in the property. An underwriter typically authorizes these insurance documents.
What does a deed do?
A deed transfers an ownership interest in a property. Deeds offer varying levels of protection for both the grantor and the grantee. Regardless of the type of deed, a grantee is most protected when they obtain title insurance. This is in case something later calls the grantor’s right to transfer title into question.
Adam Leitman Bailey of Adam Leitman Bailey, P.C., suggests being cautious when using a quitclaim deed. “Sellers may use quitclaim deeds instead of warranty deeds when they may not be familiar with the property, worry about a possible title defect, or think there isn’t clean ownership of the selling property. If a seller insists on using a quitclaim deed instead of a warranty deed, the buyer should purchase title insurance and remain wary of the transaction.”
What is a quitclaim deed?
A quitclaim deed, also sometimes known as a release or non-warranty deed, is a legal document used to transfer property ownership. Quitclaim deeds may be mistakenly called “quit claim” or “quick claim” deeds. A quitclaim deed conveys a grantor’s interest in transferring property without making promises or warranties, such as title ownership or financial obligation. This deed offers little protection to the grantee and is typically used when there is no or less than fair market consideration paid for the property interest.
However, the deed’s effectiveness depends on the grantor’s title. If a grantor still owes a financial obligation on the property, grantees should talk to a lawyer about who would be responsible for paying it and if the property could be foreclosed on if the obligation goes unpaid. Likewise, quitclaim deeds only transfer property that the grantor owns. If a grantor does not own title to the property, the quitclaim deed conveys nothing.
A lawyer’s take: pros and cons of quitclaim deeds
Advantages
- Easy to execute: Quitclaim deeds can be signed and executed by a simple form obtained by a government entity in the presence of a notary public.
- An excellent option to perform basic, low-risk changes to title ownership: When you want to add or remove a spouse, a quitclaim deed is a simple and cost-effective way to transfer or change ownership of real property.
Disadvantages
- Risky: Unlike a warranty or grant deed, quitclaim deeds are not a good way to acquire property. Before using one, review the title for any liens, easements, and other restrictions that require attention before closing.
- Recording: While a quitclaim deed does not need to be recorded to be valid, it must place others on notice that the interest in the property has changed. If you bought or received a property via quitclaim deed, record it with the county recorder’s office. – Avi of Sinai Law Firm
Pro tip: add or remove people from a property
People use quitclaim deeds to transfer property ownership. In some cases, an individual or a trust transfers 100% ownership from one person to another, like in a divorce or an inheritance of a property. Sometimes people use them to add an additional owner, like when a spouse is added after marriage. – Juli Schumann from Sound City Realty.
Exceptions to the quitclaim deed
Many states have different laws and customs which determine how and when to use quitclaim deeds. They are not used in some states because of specific underwriting and insurance requirements. In other states, insurance companies insure property titles derived from quitclaim deeds.
Three lawyers talk: quitclaim deeds can be an easy option, but be wary
You can use a quitclaim deed to add or remove parties on title. You can also use it to change how the ownership is held. For example, people that own the property as Joint Tenants can use a quitclaim deed to change their status to Tenants by the Entirety or Tenants in Common. – Erica Minchella from Minchella and Associates
A quitclaim deed is similar to any other deed. It provides legal description of the property and the names of the grantor and grantee. The deed is a quick and easy form to complete. However, it makes no guarantees or promises as to the type of title the seller holds. – Prashant Bhatia, lawyer with Prashant Law Firm
Unlike a traditional warranty deed, a quitclaim deed provides no warranties or guarantees related to the property. This means the property may not be free from title defects and encumbrances, such as tax liens, judgments, and third-party title claims. So always be sure to do your own, independent due diligence on a property and its title before accepting a quitclaim deed. – George Chebat, attorney with Enara Law
Types of real estate/property deeds
Warranty deeds are common in residential real property transactions. The types of commonly-used warranty deeds vary by state and are governed by state law. Other types of real estate deeds include general warranty, special warranty, and covenant deeds. In addition, there are a variety of less common special purpose deeds, which include:
- Grant deeds
- Tax deeds
- Administrator’s deeds
- Executor’s deeds
- Sheriff’s deeds
- Deeds in lieu of foreclosure
- Deeds of gift
Manuel Yllesca from Properties Miami recommends not using a quitclaim deed to purchase real property. “We’ve noticed an increasing number of buyers using quitclaim deeds to acquire real property ownership from homeowners quickly. We recommend using them only for family-related real estate transactions, such as adding, removing, or ceding full ownership interest in a property’s title. Don’t use a quitclaim deed to purchase property.”
A lawyer’s take: Pennsylvania quitclaim deeds
In Pennsylvania, a quitclaim deed is used only for the transfer of interest in real property, it does not transfer the property itself. Most Pennsylvania residential buy-sell transactions are conducted through a title insurance company or an attorney-title agent, and the usual form of deed is a general warranty deed. – Jay Kivitz, attorney with Kivitz & Kivitz, P.C.
Final recap
A quitclaim deed transfers the grantor’s ownership interest in property, whatever it may be, from a grantor to a grantee without any promises or warranties. Notably, the deed makes no assurance that the grantor owns the property – it simply states that they release their rights if they do. Depending on the state where the property is located, a title company, real estate attorney, or another authorized party can prepare a quitclaim deed. A title company examines the title to determine whether the grantor has insurable title to the property.
Michael Kuldiner, lawyer from the Law Offices of Michael Kuldiner, suggests using quitclaim deeds for family transactions. “A quitclaim deed is an easy way to convey your interest in the property to another. It is typically used for intra-family transfers or transfers to other related parties. A title company is recommended to make sure they provide you with an insurable deed.”
Before entering into a contract to purchase property, ensure that you understand the kind of deed the grantor intends to use to convey the property. If the seller proposes to convey the property by a quitclaim deed, the buyer needs to be particularly careful to make sure the grantor has full property ownership and that there are no financial obligations secured by the property. Check your state and local laws if you want to file your own quitclaim deed. If you have questions, ask a lawyer for advice.
Redfin does not provide legal, financial, or tax advice. This article is for informational purposes only, and is not a substitute for professional advice from a licensed attorney, financial advisor, or tax professional.
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