-Real estate industry experiences significant transactions of sale & purchase of property and transferring ownership. But, for successful change or sales of a property, both the buyer and seller have to sign a legally binding document known as a property deed.
The deed would help guide the property transfer from the grantor (seller) to the grantee (buyer). It gives the identification details of both the seller and the buyer, plus an adequate description of the property being sold.
Participants would sign different types of deeds for the exchange process, from warranty, particular purpose to quitclaim deeds. In Texas, however, you must watch out on the kinds of deeds you sign because some like quitclaims may not apply to some firms. And this post elaborates why dealing with quitclaim might be problematic.
But first;
What’s Quitclaim Deed?
A quitclaim deed is a legal document indicating the transfer of property ownership from one person to another. This deed is, however, different from other deeds like the warranty. How? A warranty deed offers protection against the legality of the sale or deed. Meaning the seller cannot claim back the property whatsoever.
On the contrary, the quitclaim deed only provides the name of the seller and buyer, with the seller’s interest in selling the property. That implies that the seller can quickly sell their property if they wish so. In other words, the buyer has no legality over the property, and their titles are not warranted.
When Is Quitclaim Deed Used?
Since this type of deed does not need extra protection, a quitclaim deed would effectively apply to property transfers between family members. It’s applicable when:
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- Transferring property to a family member or a trust
- Adding spouses or other beneficiaries to a property
- Removing names of ex-spouses from the property title
- Siblings subdividing property between themselves
- When there is a name change needed on the current deed
The Problem with Quitclaim in Texas
Quitclaims are very common and are much valid or applicable in most of the United States. However, Texas is an exception. But that doesn’t mean quitclaims aren’t helpful in Texas; they are, just with a slight difference. But, what’s the issue?
The primary cause of the problem is that most firms in Texas are cautious about quitclaim deeds. For instance, different insurance companies have a different interpretation of the Texas Property Code section that says,” Unrecorded file or property transfer are binding to any subsequent purchaser who does not pay any valuable consideration.”
Because of this, some insurance firms has failed to recognize quitclaim deed while insuring titles or real estate. Most of them are reluctant and view it as a risk of prior conveyance. For such reasons, potential buyers in Texas are seeing quitclaim as a red flag for purchase.
Though quitclaim deeds can still be effective in some situations, you should consider using a warranty deed for a successful property ownership transfer.
You can download a Texas quit claim deed form for free here at this website.