Common questions and misconceptions about quitclaim deeds
There are many common questions and misconceptions about quitclaim deeds. Many people mistakenly refer to a quitclaim as a “quick claim” deed. No matter how you say it, it is important to first understand what exactly a quitclaim deed is, what it does and who the parties are to a quitclaim deed.
The parties to a quitclaim deed include a grantor and a grantee. A grantor is the one who conveys title to real property. A grantee is the one who receives title to real property.
What is a quitclaim deed and what does it do?
A quitclaim deed only transfers the interest a grantor actually possesses in the real property to the grantee. A quitclaim deed contains no warranties of title from the grantor to grantee. This means that if a grantor does not own the property and provides the grantee a quitclaim deed to transfer the title to a parcel of real estate, the grantee receives nothing and has no legal action based upon the representations and warranties contained in the quitclaim deed against the grantor.
"A quitclaim deed only transfers the interest grantor actually posssesses..."
What are some common misconceptions about quitclaim deeds?
Based upon the mistaken reference to a quitclaim deed as a “quick claim” deed, it is believed that a quitclaim deed is a fast and easy way to transfer title to property. In truth, it takes about the same amount of time to prepare a quitclaim deed as it does to prepare a warranty deed. In addition, whether the grantee receives a quitclaim deed or a warranty deed, the title to the property is transferred upon delivery of the deed from the grantor to the grantee. It is extremely important that the grantee records the deed in the county recorders’ office or the registrar of titles office as soon as possible. Failure to timely record the deed, whether it is a quitclaim deed or a warranty deed may adversely affect the grantee’s ownership interest in the real estate.
It is extremely important that the quitclaim deed is recorded
Another misconception is that a grantee is unable to obtain title insurance if they receive title to the property by a quitclaim deed. To determine whether title to a property is insurable, a title company will prepare a title commitment based upon a search of the county’s real estate records detailing any defects, liens and encumbrances that may exist against the title to a parcel of property. The existence and extent of any such defects, liens and encumbrances determines the insurability of the title to the real estate, not the type of deed a grantee receives. Any time a grantee is purchasing real estate, the grantee should obtain an owner’s policy of title insurance to protect their ownership interest.
It is also a common belief that by providing a quitclaim deed to a grantee, the grantor is released from their previous financial obligations and responsibilities under a mortgage. This is simply not correct. Often this situation occurs when a couple divorces and one spouse conveys their interest to the other spouse by a quitclaim deed on a property that remains subject to a mortgage. The spouse conveying their interest is not released from the obligations of the mortgage. The spouse acting as the grantor remains personally responsible for the mortgage obligation despite no longer having any interest in the property. In order to be released from the obligations of the mortgage the spouse receiving the property as grantee must refinance the property or the spouse acting as grantor must obtain a release directly from the mortgage company.
A quitclaim deed does not release the grantor from obligations under a mortgage
When do you use a quitclaim deed?
Most commonly quitclaim deeds are used as a cost effective fix to correct boundary line problems and title defects. Quitclaim deeds are also used to convey a grantor’s interest in real estate to a grantee when the grantor and grantee were, prior to the conveyance, co-title owners in the property. Examples include creating a joint tenancy title arrangement between the property owners as well as terminating a former spouse’s interest in the property after a divorce.
No matter the type of deed a grantee receives to transfer title to property, a grantee should employ an attorney or title company to insure that (1) the proper deed is being used; (2) the deed is drafted properly; (3) the title to the real estate is clear from any defects, encumbrances and liens; and (4) the deed is being properly recorded.