Quitclaim Deeds

Both quitclaim and warranty deeds are used to transfer property ownership. A warranty deed also confirms that the property is free from any liens, such as those from creditors or the IRS, and assures the buyer that the seller legally owns the property and has the right to sell it.

On the other hand, a quitclaim deed simply transfers whatever interest the seller has in the property, which could be anything from zero to full ownership, without any guarantees of lien-free status or confirmation of the seller’s actual ownership stake.

Quitclaim deeds are typically avoided when a property has an outstanding mortgage because they don't affect the mortgage; the original owner remains liable for it. This can lead to complications if the new owner doesn't make mortgage payments or sells the property, leaving the original owner without legal recourse.

To prevent issues, the new owner may need to take over the mortgage with the lender’s approval or refinance to pay off the original loan. Quitclaim deeds are best for low-risk, no-money exchanges between familiar parties since they don't guarantee a clear title.

For transactions needing more security or where quitclaim deeds aren't suitable, a warranty deed, which assures the property's title status, is recommended.

What does a quitclaim deed do? 

A quitclaim deed transfers an owner's interest in property—whether that's land, a house, or other real estate—from one person (the grantor) to another (the grantee). The interest transferred can range from zero to 100 percent, depending on the grantor's actual ownership stake.

Can a grantor transfer more interest than they own? 

No, a grantor can only transfer the interest they actually have in a property. For example, if a grantor owns 50 percent of a property, they can only transfer that 50 percent to the grantee.

When might someone use a quitclaim deed? 

Quitclaim deeds are commonly used among family members or close associates. For example, a parent transferring a home to a child, a spouse adding their partner to the title after marriage, or a divorcée removing their name from a property title. They are also used to transfer property into a living trust.

What if there's uncertainty about someone's property interest? 

If there's a chance someone might have a claim to a property, a buyer might request that person to sign a quitclaim deed. This helps ensure the buyer acquires a complete title.

Are there legal considerations with quitclaim deeds? 

Yes, the specifics can vary by jurisdiction, so it's crucial to consult with professionals knowledgeable about local real estate laws and the responsibilities of both grantors and grantees. This ensures that the quitclaim deed meets all legal requirements and is binding.

Need help transferring property?

If you're considering transferring property to a family member or into a trust, contact New American Funding for guidance to ensure everything is handled correctly.