What is a Quitclaim Deed?
The quitclaim deed is a type of legal document used to transfer interest in real estate from one person or entity (grantor) to another (grantee). Unlike other real estate deeds, it conveys only the interest the grantor has at the time of the deed's execution and does not guarantee that the grantor actually owns the property or has good title.
Without warranties, it offers the grantee little or no recourse against the seller if a problem with the title arises in the future. This lack of protection makes a quitclaim deed unsuitable when purchasing real estate from an unknown party in a traditional sale. It is, however, a useful instrument when conveying property from one family member or spouse to another, and it is commonly used in divorce proceedings or for estate planning purposes.
Title companies may require a quit claim deed in order to clear up what they consider to be a cloud on the title prior to issuing title insurance. Similarly, prior to funding a loan, lenders may ask someone who is not going to be on a loan, such as a spouse, to complete and record a deed quitclaiming their interest.
Common Uses for a Quit Claim Deed:
Real Estate Transfers Between Family Members
Quit claims are often used to transfer property to and from family members.
Transfers between parents and children, between siblings, and between other closely related family members are easily done with this type of deed.
Adding Or Removing A Spouse From Title
Whether resulting from a divorce or a marriage, a real estate owner can use a quit claim deed to add a spouse to or remove a spouse from the title of the property.
Owner Name Changes.
It is possible for an owner's name to change while owning real estate.
This is true for a natural person or any other entity that can legally own real estate.
While it is not required to change the information listed on title when an owner's name changes, it is a good idea to do so.
It is common to use a Quit Claim Deed to reflect name changes on real estate title.
There are many reasons for a name to change, marital status is the most common.
Transferring Real Estate To An LLC Or Corporation
With holding of real estate in the protection of LLC's and Corporations becoming more common, so are quit claim deeds.
Corporate transfers are usually done with this type of deed as it is generally a transfer between closely related entities.
Transferring Real Estate To A Trust
As with corporate transfers of real estate, transfers to a Trust are equally common.
Family planning that deals with property meant to carry on through generations often involves an initial transfer from a family member into a trust.
Removing A Cloud On Title For Title Insurance
In the process of insuring title to real estate title companies may find a "cloud" in the title.
Generally this means that there appears to be someone may or may not have an interest in a property that has not been accounted for and it is causing a break in the chain of title.
It is common for the company insuring the title to require the person in question to quit claim their interest in the property prior to issuing the title insurance.