What Is A Quitclaim Deed And How Does It Work?

A quitclaim deed is a useful legal document and just one type of property deed. Whether you're a first-time home buyer or a seasoned investor, understanding how quitclaim deeds work can be beneficial in various real estate scenarios. Let's take a look at what exactly a quitclaim deed is and how it works in property transfers.

What Is A Quitclaim Deed?

A quitclaim deed is a legal document used to transfer interest in a property from one party (the grantor) to another (the grantee). Unlike a warranty deed or a grant deed, a quitclaim deed does not provide any guarantees or warranties about the property's title. Instead, it simply transfers whatever interest the grantor may have in the property at the time of the transfer.

What Is A Quitclaim Deed Used For?

Quitclaim deeds don’t work for every situation because they don't guarantee the property's title. For instance, they're not typically used when buying a house. Instead, they're commonly used for the following:

• Estate planning: Quitclaim deeds are often used in estate planning to transfer property interests to heirs or beneficiaries. By completing a quitclaim deed, the property owner can ensure a smooth transition of ownership upon their passing, potentially avoiding probate proceedings.
• Disputes with family members: In situations where there are disputes or disagreements among family members regarding property ownership, a quitclaim deed can be used to clarify and transfer ownership interests. This can help resolve conflicts and ensure clear title to the property.
• Divorce: During divorce proceedings, one spouse may transfer their ownership interest in a property to the other spouse using a quitclaim deed. This allows for a clean break in property ownership and helps with the distribution of assets between the divorcing parties.
• Gifting real estate: Quitclaim deeds are commonly used to gift real estate to family members, friends or other parties. By executing a quitclaim deed, the property owner can transfer their interest in the property as a gift, without the need for a traditional sale transaction.
• Title error corrections: If there are errors or discrepancies in the property title, such as misspelled names or incorrect legal descriptions, a quitclaim deed can be used to correct these issues. The deed can clarify ownership and help rectify any title problems that may arise.

Example: How Does A Quitclaim Deed Work?

Property ownership is transferred through a quitclaim deed by following the steps below: 

1. Fill out a quitclaim deed form: First, ensure you have your assessor’s parcel number (APN) ready, which you can find on your valuation notice, tax bill or deed. If needed, you can also locate it on your county’s government website. On the form, provide your APN, city and county, along with your property's legal description from your deed.
2. Have both the grantor and grantee sign the form: Identify yourself as the grantor by entering your full legal name. List all grantors if there are multiple property owners. Also, provide the full legal name of the grantee. All parties will need to sign the form.
3. Get the form notarized: In most states, you need to sign any deed in front of a notary public because a deed is an official legal record of a real estate transaction. Without notarization or recording, the document isn't considered official or valid. To properly notarize the deed, you'll sign it while a notary public witnesses. They'll then sign and seal it, certifying the legal transfer of ownership for the property.
4. File the form at your county clerk’s office: Once you have your notary seal, it's time to complete the process. Take your quitclaim deed to your county clerk's office to have the transaction officially recorded in the public record.
5. Submit any other necessary legal documents: Before heading to the county clerk’s office, make sure you have all necessary paperwork ready. Visit the county clerk’s website to find out what documents are required and how to obtain them. The homepage usually has links to the required paperwork and instructions. If you need clarification, you can also find the office's phone number on the website.
6. Be prepared to pay any associated fees. The cost will vary from county to county, but typically starts with a base fee, a fee for each additional page of your document, plus additional fees.

Quitclaim Deeds Vs. Other Types Of Deeds

Quitclaim deeds, along with general and special warranty deeds, are important legal documents used in real estate transactions. Understanding the differences between them is crucial for anyone involved in buying, selling or transferring property.

Although general property deeds and special warranty deeds offer different levels of protection, both afford more security to a grantee than a quitclaim deed does. Unlike general and special warranty deeds, a quitclaim deed lacks any of the agreements found in other property deeds.

Quitclaim Deed Vs. General Warranty Deed

A general warranty deed offers the highest level of protection for the grantee during a real estate transaction. Within this deed, the grantor makes specific promises, known as covenants, which include asserting ownership of the property and the right to sell it. Additionally, it assures the grantee that the property is free from liens and encumbrances.

Quitclaim Deed Vs. Special Warranty Deed

A special warranty deed offers fewer protections compared to a general warranty deed. Instead of assuring the buyer that there are no liens or encumbrances, it solely guarantees that none were created by the current owner.

Pros And Cons Of Quitclaim Deeds

Let’s take a look at a few pros and cons of quitclaim deeds.

Pros 

Here are some benefits of using a quitclaim deed:

• Quicker transfer than warranty deeds: Compared to a warranty deed, a quitclaim deed is a faster process. There's no need for a traditional closing, and you often don't need a real estate attorney to assist you.
• More affordable than other real estate transactions: Using a quitclaim deed typically encounters lower expenses compared to other real estate transactions. You'll avoid many of the typical closing costs and professional fees associated with home purchases.
• May not need a real estate attorney: Quitclaim deeds are generally straightforward documents without the complexities often associated with other types of real estate transactions. Many people are able to complete quitclaim deeds without legal assistance, as the process typically follows standard procedures.

Cons 

There are also some disadvantages to using a quitclaim deed:

• No guarantees to the new owner: With a quitclaim deed, the grantor doesn't provide any guarantees to the new owner. There are no assurances regarding the property's freedom from liens and encumbrances, leaving the grantee responsible for conducting a title search if needed.
• No proof of ownership: When a grantor assigns a quitclaim deed to transfer property, they aren't required to demonstrate ownership or prove their right to transfer it to another party.
• Not accepted by lenders: If you're purchasing a house through a mortgage, using a quitclaim deed may not be permitted. Lenders typically insist on warranty deeds to safeguard themselves when funding a property purchase.

Quitclaim Deed: FAQs

A quitclaim deed can be a useful method for property transfer in specific circumstances. However, it's important to understand its details thoroughly before using one.

What is the primary purpose of a quitclaim deed?

Quitclaim deeds enable a grantor to transfer their ownership interest to a grantee. They're often more cost-effective than other deed types, potentially not requiring a real estate attorney's involvement. However, caution is advised when utilizing quitclaim deeds.

Does a quitclaim deed give you ownership?

Indeed, a quitclaim deed successfully transfers property ownership from the grantor to the grantee. However, the grantor isn't obligated to verify their ownership or the right to transfer it. That means there's a possibility of someone transferring property ownership without having the legal right to do so.

When should I use a quitclaim deed?

Quitclaim deeds are commonly used among family members. For instance, when someone marries and wishes to include their spouse's name on the title or deed, or during a divorce when one spouse's name is removed. Similarly, parents may use quitclaim deeds to transfer property to their children, and siblings may use them to transfer property to one another.

Is a “quick claim deed” the same as a quitclaim deed?

Yes, “quick claim” is also used when referring to a quitclaim deed. They are often called quick claim deeds due to the speedy nature of the transactions.

How long is a quitclaim deed good for?

A quitclaim deed represents a permanent transfer of ownership from the grantor to the grantee, with no expiration date. However, to ensure official recording of the transfer, new deeds must be filed with the county.

What are the tax implications of a quitclaim deed?

A quitclaim deed is typically a taxable event. Selling your home with a quitclaim deed may subject you to capital gains taxes if the property value has risen substantially. Similarly, gifting a home through a quitclaim deed could result in gift tax obligations.

How do I cancel a quitclaim deed?

The easiest way to cancel a quitclaim deed is if both parties agree to do so. If someone thinks a quitclaim deed was used improperly, they can challenge it in court. However, there's usually a time limit for these challenges, which varies by state.

The Bottom Line 

A quitclaim deed can be useful in real estate deals. It allows the transfer of property between parties. Though they don't offer as much protection as warranty deeds, quitclaim deeds are handy for family transfers and sorting out title problems. If you’re looking to buy property, start the approval process with Rocket Mortgage^® today.