Real Estate 101: Guide to Quitclaim Deeds

The legal documentation used in real estate transactions can sometimes be confusing. The quitclaim deed is no exception. It’s different from a warranty deed and is used differently, too. Here at Bay National Title Company, we want to make sure you have the information you need to make the right decisions in a real estate transaction. We help people in Florida, and all over the country, to make home buying and home selling streamlined and as straightforward as possible. 

 

What is a Quitclaim Deed?

A quitclaim deed is a legal real estate document that transfers a seller’s interest to a buyer. The most important thing to know about quitclaim deeds is that, even though they are a legal document, they do not contain any warranties of title to the property. They typically only convey whatever interest the grantor had, if any!

Quitclaim deeds should not be used as the sole deed for a new real estate transaction because they do not give you full legal rights to the property.

 

Why Would You Use a Quitclaim Deed?

These types of deeds are typically used in family property situations.  Say, for example, a brother wants to hand over a house in a rural area to his sister when he buys a townhome in the city. A quitclaim deed can be used then. 

In real estate transactions with a foreclosed property, they can be used to release any legal liabilities for the title from the governing body. Again, the preferred instrument will be a Limited Warranty Deed. Title insurance often is NOT issued when title passes solely by Quit Claim Deeds in most states.

 

 

Can You Use a Quitclaim Deed for a House with a Mortgage?

The short answer is yes. But, it is important to know the parameters.  If the house in the country in the example above has a mortgage, the brother who moves into the city is still legally liable for the mortgage. The sister can have possession and live in it, but the mortgage doesn’t pass to her with the quitclaim deed. Title will pass, but subject to the open mortgage unless assumed with lender consent. For future sales, it is preferable to use a Warranty Deed, however.

 

How Does a Quitclaim Deed Affect Taxes?

Quitclaim deeds do not change any liability when it comes to taxes. If there happen to be back taxes owed, the grantor (the one that transfers the property to another person) is still responsible for them. People sometimes think they can get around taxes owed through a quick quitclaim deed, but that is not the case.

 

What are the Differences Between a Warranty Deed and a Quitclaim Deed?

A warranty deed will give you a higher level of protection when it comes to legal rights to a property. When you couple a warranty deed with title insurance, it asserts that the grantor has rights to sell the property, that there on no liens, title defects, or encumbrances on the property, and that the grantee will take full legal possession. 

Title insurance policies give homeowners protection not only during the sale of the home but also for the full length of time the home is in their possession. This is important for peace of mind and financial security.

 

Is a Quitclaim Deed a Good Choice?

Depending on the circumstances, it can be a good choice. But typically only in very limited situations. Since there are no legal guarantees to the property, it can be a gamble. You know that old saying, “What you see is what you get?” It serves well here. Homes that have been handed down in the family for generations often use quitclaim deeds. They know what shape the roof or plumbing is in, so they know what to expect. They know the neighbors, the boundaries, and what they can do with the property.

That being said, instead of using a Quit Claim Deed, you should insure the title with a warranty deed. This will give you peace of mind and protection for the long haul.

 

How Do You File A Quitclaim Deed Form?

Filing a quitclaim deed form is pretty straightforward.  It requires a legal description of the property, the names of the grantor and the grantee, and the date of the transfer. If there is any money exchange, that would be included too. 

Depending on the state, you may need to have signatures witnessed. In Florida, the grantor and the grantee have to sign the quitclaim deed in front of two disinterested witnesses. (Ones without any interest in or rights to the property). It is typically notarized and then filed with the county clerk in the county of record.

 

Contact BNTC for Your Real Estate Transaction Needs

Here at Bay National Title Company, we have worked with all types of real estate transactions, helping people in Florida and across the United States have a better closing experience. From new construction to second homes on the water, we are efficient, precise, and are with you every step of the way. BNTC brings unmatched accuracy and security for your real estate transaction and title needs.

Contact us today and let us know how we can help.