A Quitclaim Deed is similar to a grant and warranty deed in that it transfers interest in a real property from one party to another; however, it does not ensure a marketable title or implied warranty.
With a quitclaim deed, the grantor “quits” his or her actual interest in a property. However, that interest may not be full. For example, a property’s title may have a lienholder with partial interest in the property.
It is therefore possible for a buyer to purchase a home executed with a quitclaim deed and not be entitled to the entire property. If a grantee does not have full interest in a property, he or she does not have the right to live on it.
Quitclaim Deeds significantly increase the risk that a buyer is relying on inaccurate and dated information during the decision-making process. Consequently, title insurance rarely covers quitclaim deeds.
Most grantees prefer not to use a quitclaim deed unless they know or trust the grantor. One common situation in which a quitclaim deed may be used is when property is not sold, such as the transfer of property between family members or the addition or removal of a spouse’s interest in a property.
Therefore, it is very rare for unacquainted sellers and buyers to use quitclaim deeds. More often, quitclaim deeds are used to end or rather quit a party’s claim to an interest in a property. They are most often used for their ease.
A quitclaim deed has minimal protection. Without a marketable title or implied warranty, a grantee receives all of the interests held by a grantor at the time a quitclaim deed is executed. It also does not benefit a grantee any legal recourse to sue for damages. This leaves room for potential title disputes to occur.
For example, a grantee may believe that all interests in a property will be transferred to them, but multiple liens on the property mean that only a portion of the interests will be transferred.
Terminating a Joint Tenancy Through a Quitclaim Deed
A joint tenancy can be terminated in many ways, depending on whether the tenants wish to retain an interest in the property or not.
If a joint tenant does not wish to retain an interest in a property, he or she may terminate a joint tenancy by executing a quitclaim deed to convey his or her interest in a property to a third person.
This must be done in the presence of a notary and submitted to the County Recorder’s Office. The third person then becomes a tenant in common with the remaining joint tenants; the third person cannot become a joint tenant, as the four conditions of a joint tenancy (time, title, possession, and interest) do not apply.
There are other deeds that offer better protection of a buyer’s interests. The fact that title companies rarely insure such deeds significantly increases the chance that the buyer is relying on inaccurate and dated information during the decision-making process. Property is often transferred with a quitclaim deed when property is not sold such as the transfer of property between family members or adding or removing a spouse’s interest in the property.
Example of Quitclaim Deed
Tina claims to be the full owner of the Rancho estate. One day Tina meets a woman named Laura and soon after become very good friends. Laura has never seen or heard of the other property owners of the Rancho estate, and is led to believe Tina is the sole owner of the property.
Tina, is later informed that Laura’s father, who was a man of wealth, had passed away. Tina sees an opportunity, and begins to suggest to Laura purchase the Rancho estate. Thrilled at the prospect of owning the beautiful Rancho home, Laura agrees. Tina is quite aware that Laura has very little to no knowledge of real estate and tells Laura she’ll have some paperwork for the sale ready the following day. Tina hands the quitclaim deed to Laura and she then transfers the money to Tina for the purchase of Laura’s interest in the property. Unfortunately for Laura, Tina did not have full interest of the property, as there were other co owners along with a placement of judgments on the property, which meant her purchase of the property was for Tina’s interest and not for possession of the property.
