Quitclaim deeds are a particular type of deed available in most U.S. markets.
This is a common theme of our Peak University, but understanding what title you are being granted, and how the kind of deed you are receiving may affect your title interest, is incredibly important.
This is especially true for quitclaim deeds. A quitclaim deed does exactly what it says: it quits the claim. Essentially, this deed says “I, the grantor, have an interest in this property. I’m going to sell whatever that interest is to you.”
Unlike other types of deeds, a quitclaim deed contains no guarantees. The grantor may own everything they say they do or none of it. The grantor may have legal title or they may not.
Either way, by purchasing through a quitclaim deed, you are assuming the risk that the grantor does not have the rights they say that they do.
It’s important to do your homework and to be skeptical about purchasing a property through a quitclaim deed when you do not know the grantor well.
That said, quitclaims can be very useful in certain situations:
Family conveyances: quitclaim deeds can be very helpful when one family member is giving their right to property to another family member. Quitclaim deeds can make the process more straightforward, leading to easier consolidation of interests.
Cleaning up title: when the title-clearing process surfaces defects, it could be helpful to have the parties execute a quitclaim deed to address those defects fairly quickly.
Transfers between related corporate entities: Similar to family conveyances, quitclaim deeds can be helpful in transferring ownership of a property from one business entity to another, potentially avoiding the payment of transfer tax.
In short, quitclaim deeds are best when they are a quick way of passing ownership between familiar parties or consolidating multiple title interests in the property. In any other situation, using a quitclaim deed puts the grantee at a disadvantage with very little protection. Thus, the grantee should use caution, research the grantor well, and price the title accordingly. Title companies are generally wary of this type of deed, especially when used outside of the contexts listed above.
The information provided in Peak Title Professionals, does not, and is not intended to, constitute legal advice. All content is for general informational purposes only and is not intended to provide a complete description of the subject matter. Specific processes will vary based on applicable law. The title and closing process will be handled by a third-party attorney to the extent required by law. Product offerings vary by jurisdiction and are not available or solicited in any state where we are not licensed.
