What is a quitclaim deed?
A quitclaim deed is a legal document that transfers ownership of real estate from one person to another. The deed identifies who is handing over an interest in the property (the grantor) and who is accepting it (the grantee). Quitclaim deeds, commonly mispronounced as “quick claim” deeds, often are used when property isn’t sold. Examples include:
- When the owner dies and bequeaths the property to an heir.
- When the owner adds the spouse’s name to the title.
- When an ex-spouse’s name is removed from the title after divorce.
- The property is transferred to a living trust.
Unlike a warranty deed, a quitclaim deed does not guarantee that the grantor is the rightful owner and has the right to transfer the property.
A deed transfers title
A deed is a document that conveys or passes real estate from one party to another. Whether you buy a house from a stranger, inherit it from your parents or add your spouse to the home’s title, a deed accomplishes the deed of transferring the title.
A deed isn’t a sales contract. A sales contract is a promise to convey property in exchange for something (usually money). In contrast, a deed isn’t a promise to convey; it is the conveyance itself.
What a deed includes
A deed contains a legal description of the real estate being transferred. In urban or suburban locales, the legal description identifies which lot the property occupies in a platted subdivision. Deeds in rural areas might use meets-and-bounds descriptions of the boundaries, which identify where the property lines are in relation to landmarks.
The deed must identify who is handing over an interest in the property (the grantor) and who is accepting it (the grantee). Most counties require the deed to have the addresses of all parties involved. And a deed wouldn’t be a deed without words of conveyance, a passage that says the grantor intends to convey an interest in the property to the grantee.
Deed mistakes can cause headaches
Old and inaccurate information on a deed can cause problems. If the legal description is incorrect, for example, and says the property line is 150 feet north of the house, when it’s actually 145 feet, the buyer could mistakenly build a fence on a neighbor’s property.
More commonly, people’s names are wrong. This often happens when a woman changes her last name after marriage or divorce. Let’s say a single woman named Mary Jones buys a house. Then she gets married, changes her last name to Smith and sells the house. If the deed doesn’t identify her as Mary Smith, formerly Mary Jones, the document has some ambiguity that could have been avoided.
What is a warranty deed?
A warranty deed is one in which a property owner, when transferring the title, warrants that he owns the property free and clear of all liens. A warranty deed is used in most property sales.
The warranty deed says that:
- The grantor is the rightful owner and has the right to transfer the title.
- There are no outstanding claims on the property from lenders using it as collateral or from other creditors.
- The property can’t be claimed by someone with a better claim to the title. If any of those claims is wrong, the buyer is entitled to compensation.
A title insurance policy backs up the claims of the warranty deed, protecting the lender or buyer from disputes about ownership or liens.
The crucial difference between the two
A quitclaim deed doesn’t say you’re warranting what you own; just that you’re transferring what you do own. It has less protection than a warranty deed.
With a quitclaim, the grantee has no legal recourse if problems with the title turn up, or if a forgotten lienholder emerges. There isn’t a title policy. That’s why it’s riskier. On the other hand, a lot of quitclaims are executed when the property stays in the family, and that reduces the risk.
There also are cases in which a seller might execute a warranty deed on part of the property and a quitclaim deed on another part of it. This might be the case with properties that border rivers and lakes, where the owner sells underwater land and it’s not particularly clear who owns it.