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Beware of Seller! Why You Should Avoid a Quitclaim Deed

Monday, January 6, 2020

If you own a home or property, you may have considered using a quitclaim deed to transfer this asset to another individual. Likewise, you can add or remove other individuals to or from the rights to your property with this document. But, there are a few things you should know before utilizing this type of deed.

In this article, we'll discuss why you may wish to avoid a quitclaim deed and provide an answer to the question "what is a quitclaim deed?" 

A Few Reasons to Avoid a Quitclaim Deed 

A quitclaim deed is a written, legal document that outlines the transfer of ownership of real property from one owner to another. While this is usually an easy way to transfer ownership, it's not always recommended for the following reasons:

A Quitclaim Deed Does Not Affect the Mortgage in a Sale

A quitclaim deed assists in the transfer of a title, however, it does not affect a mortgage. For example, in a sale of real property with this type of deed, the grantor or the lienholder will remain liable for the mortgage even after the ownership has been transferred via a quitclaim deed.

Provides the Least Amount of Protection Among Deed Types

Is a quitclaim deed safe?

It ultimately depends on what you're using it for. This type of deed is also known as a "non-warranty" deed because it only conveys the interest of the current grantor. It does not provide any guarantee regarding the quality of the title. This means that the grantee has no legal right of warranty against the grantor.

For example, the grantee, or the individual receiving the deed, will not have any guarantee of ownership of the property. For this reason, it is generally recommended to only use a quitclaim deed between trusted parties such as parent and adult child or adult siblings.

Different from a Special Warranty Deed

Keep in mind that this also means that a quitclaim deed is quite different from a special warranty deed. It does not protect against personal liability issues and usually must be preceded by a warranty deed in order to be considered complete and acceptable.

Quitclaim Deed Loopholes

Quitclaim deeds provide very limited buyer protection. That's why you should know what types of loopholes to watch out for, like these:

  • A quitclaim deed only conveys legal interest in a property
  • A quitclaim deed may be provided by a person who does not own the property and therefore this person may not be liable for damages
  • Breached covenants may be disregarded as none were created initially

These loopholes can result in your quitclaim deed becoming a worthless document wherein nothing is actually transferred.

Choosing a Title Agency

If you need to remove a title defect and think a quitclaim deed is the best way to do it, you need a title agency you can trust. We want you to think of us when you need a third party involved to get the details just right. 

Contact us to help make the process with the transfer, defect, or establishment of your quitclaim deed a smooth one. 

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