Top 3 Reasons Why You Shouldn’t Use A Quitclaim Deed To Transfer Title

Photo Credit: Unknown

Photo Credit: Unknown

Let’s take a moment to address the differences between a Quitclaim Deed and a (Special) Warranty Deed. There are several points to consider when choosing the correct deed to use for a title transfer. When you look at the differences between the deeds and scenarios for which each is best suited, you might reconsider using that Quitclaim Deed to transfer title.

Quitclaim Deeds: Why They Stink.

A Quitclaim Deed (often mistakenly referred to as a “quick claim” deed) is a popular instrument for title transfers. However, when choosing a deed its popularity should not be a determining factor! Many different deeds will convey title to real property, each will be useful for different situations. One of the most important things to keep in mind when choosing a Quitclaim Deed is that it doesn’t even say whether or not the person conveying title owns the property! The grantor offers no “guarantees” as to their ownership interest in the property or the condition of the title, which brings us to reason number 3…

Reason Number 3:  NO GUARANTEES.

Although a quitclaim deed does convey title, doesn’t make any other guarantees, warranties or assurances. Basically a quitclaim deed says this:

“I don’t promise that this property has a clean title, or even that I own it at all! Whatever interest I may have in the property I’m giving to you. If you find out later you don’t have a marketable title, you can’t sue me! I didn’t promise you anything! Bwahahahaha!!!”

Okay, maybe that’s a bit dramatic… but you get the point! Many bloggers and “experts” (sometimes even real estate attorneys or a divorce court) might advise you to use a quitclaim deed. Lots of people have used them to transfer property into or out of a trusts, limited liability companies, between husbands, wives and family members “because you don’t necessarily need such strong guarantees in that situation”. Well that may be true, but it’s certainly not the only thing to think about.

Reason Number 2:  THE “SUBJECT TO” SUBJECT.

You might think that a you have to use a quitclaim deed because the property isn’t “free and clear” from liensNot so! This is probably one of the more common misconceptions we’ve heard regarding quitclaim deeds (and Warranty Deeds). The argument goes something like this:

“Well I can’t use a Grant Deed, Warranty Deed or a Special Warranty Deed because those documents say the property is free from liens… I have a mortgage on the property so I have to use a quitclaim deed!”

Well, that’s almost true. Warranty Deeds and Special Warranty Deeds do contain verbiage that makes some sort of guarantee as to the condition of the titleWhat they actually say, however, is that all existing claims have been disclosed. Warranty Deeds do not say the property is “free and clear”.  You see, each deed has a section that contains “subject to” verbiage. In the “subject to” section of the deed, certain elements are called out as being part of the transfer. A typical example of “subject to” language is as follows:

“SUBJECT TO: Current taxes and other assessments, reservations in patents and all easements, rights of way, encumbrances, liens, covenants, conditions, restrictions, obligations, and liabilities as may appear of record.”

This is significant because any liens that are recorded in the public record are “part of the package”. The grantee has no legal recourse to go back to the grantor because of a lien on the property he didn’t know about, so long as it was properly recorded (and therefore disclosed). When you purchase a title insurance policy, the title company will do a title search and list everything they find on the “Schedule B” section of the title commitment.

Reason Number 1:  TITLE COMPANIES HATE ‘EM.

Many title examiners will not accept a prior conveyance made by quitclaim without additional documentation signed by grantor. Remember, a quitclaim doesn’t guarantee anything! So when a title officer sees a quitclaim deed in the chain of title, they may question whether or not the grantor in the quitclaim deed had something to hide. Imagine how difficult it would be to track down an ex-spouse or trustee of a trust (who’s probably out of the country or deceased) so they can sign off on this property, again… just clear up the chain of title because the title officer doesn’t like the quitclaim deed. Now this is holding up the escrow! People want to move in and unpack! People want their money! If you don’t have anything to hide, why not use a stronger document? Here’s a good one that you can use in almost every state: The Special Warranty Deed.

Want to know when quitclaim deeds are supposed to be used? Check out this article!

Comments

  1. Courtney Lynn says:

    What happens when a Quitclaim deed is transferred to a girlfriend, but the boyfriend still has the mortgage and the relationship goes sour? The girlfriend refuses to transfer the deed back over and the boyfriend is stuck with the mortgage. The girlfriend never paid into the mortgage (no job). Is there a way to force her to transfer the property back over?

    • Well we certainly don't recommend sending over goons with baseball bats! If someone wishes to compel another to transfer title of property, the only real recourse is through the court system… and even after a court decrees such a conveyance should take place, it doesn't always happen in the time frame or manner in which the winning party would prefer. You can't *force* someone to sign a deed.

      We would suggest the parties seek legal counsel from a qualified real estate attorney in the area.

  2. raheemah says:

    I trying to find out if there is a will and property was left to the trustee! what kind of deed should be used!
    THE City were I live told me that they accept them ! However what happens to his signature, he's not here! thanks

  3. lafayette says:

    which document is best to use when dealing with a mortgage company(servicing agency) and wanting the mortgage company to have a title REISSUED IN THE OWNERS NAME AFTER A LOAN MODIFICATION?

  4. Great post

  5. J. Lane says:

    in many cases with a Title Company the reason we question any deed of record prior recorded has less to do with the document and more to do with it being an "Uninsured Recorded Document", these all called into questions regularly in the Title World. Many years ago one Title Company quit (no pun intended) using Quitclaim Deeds to transfer Spousal interest, reason given of course was a law suit. Husband and Wife got divorced, ;Husband was ordered to pay the ex-wife a certain amount of money when he sold or refinanced the property. The wife's attorney felt it was best to prepare a Note and Deed of Trust to secure that amount and record it against the property and have the Wife sign a Quitclaim Deed after the Deed of Trust was recorded on the property in her favor, HEREIN IS THE PROBLEM WITH THE QUITCLAIM DEED, Deed of Trust recorded First, Quitclaim after, verbiage states: hereby remises, removes, and quitclaims ANY AND ALL INTEREST in subject property which includes MONETARY, so a court of law nullified her Deed of Trust and of course the Title Company got sued.

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