Homeowners

Quitclaim Deeds: Easy to Use, But Beware the Risks

If you’re thinking of transferring ownership of your property, you may have come across something called a quitclaim deed.

The deeds, which some people mistakenly call it a quickclaim deed, are a common option that can work in certain transactions.

Often, quitclaim deeds are used in private sales. Many folks use them if they’re passing their homes to family members. They are also common in marriages or divorces, as the name of a spouse can be added or removed from the title on the home. (The title denotes ownership of the property.) 

The deeds are also a tool to clear up the rights of heirs to inherited property and settle other issues regarding the title when things change.

“A lot of people try to use it because you can go to any [office supply store] and get the form,” said Gaylene Rogers Lonergan, whose eponymous real estate law firm and title company covers the Dallas area. “It’s inexpensive, and you can do it yourself.”

How to use a quitclaim deed

Using a quitclaim deed is generally very simple.

In most states, you will need to fill in your name, the name of the party you are transferring the property to, and a description of the property in addition to any other information requested.

Then the form must be notarized and sent to the local county recorder. The recorder may require you to bring additional documentation.

Quitclaims don’t come with guarantees

If the quitclaim deed sounds too easy to be true, that’s because it comes with plenty of caveats that may make you want to think twice before using one.

“It’s useful in very limited circumstances, because it can create issues with the chain of title,” Lonergan said. “They don’t guarantee that the grantor owns the property. Instead, they convey the idea that ‘if I have any interest in the property, you can have it.’’’

That little word “if” can become a huge issue if there’s a lawsuit over who owns the property.

For example, say a parent (the grantor) passes the property to a new spouse through a quitclaim deed. The children could sue. The same could happen if the owner gives it to just one of their children. The rest of the kids could challenge the deed in court.

If there’s a problem with the title at the closing of a sale, the title company often will not accept a quitclaim deed as proof of ownership.

“It also depends on how long ago the quitclaim deed was filed,” Lonergan said. “I’ve had cases where the grantor has died, and we’ve had to get the dead relative’s children to sign off on it. That’s not always easy.”

Lonergan always advises clients to consult a lawyer before executing a quitclaim deed because “the recipient needs to realize what little they are getting.”

She added that a quitclaim deed, although inexpensive to execute, may end up being more costly than you expect.

“People shouldn’t be practicing law without a lawyer,” she said. “Down the road you can get in trouble and end of paying me more” to fix things.

Should you use a warranty deed instead of a quitclaim deed?

There is another safer alternative to a quitclaim deed: The warranty deed. Its two common forms, general and special, are widely accepted in real estate deals.

The safer bet is the general warranty deed. It covers the whole history of the property. That means someone from the past can’t suddenly appear and claim they have an ownership stake in the property.  

“The general warranty deed is the gold standard,” Lonergan said. “It protects the person buying and the person selling.”

The special warranty deed, sometimes used by banks or developers or in commercial sales, limits the liability of the seller. It only covers the time in which the seller owned it.

The general and special warranty deeds are typically prepared by lawyers. So, they do cost more upfront than quitclaim deeds.

Whichever type of deed you choose, Lonergan said, it’s best to get help from an expert.

“Do consult a layer first because you can be creating more problems than you’re fixing,” she said.