-Deeds are legal tools used in real estate transactions. There are three types of deeds: special warranty deeds, general deeds, and quitclaim deeds.
The difference between each depends on the type of transaction the parties are making. In this post, we provide you with the details about quitclaim deeds to understand what it is and how it works.
What Is A Quitclaim Deed?
This is a legal document used in real estate transactions to quickly and seamlessly transfer real property ownership rights from a grantor to a grantee. Usually, a quitclaim is used when the transfer does not involve monetary transactions.
The deed document contains the names of the grantor and grantee with a complete description of the property being transferred. It is filed at the county recorder of deeds office and immediately became a public record.
Advantages of quitclaim deeds
A quitclaim is vital in real estate transfers in several ways. Here are the common pros of this legal document.
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Effective for internal transfers, this deed allows the transfer of properties between people and living trusts or among family members.
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Simple in nature; most of these deeds are short and precise. The templates can be accessed from real estate or legal websites.
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Legally binding; despite being simple, quitclaims are formal legal documents that can be used to authenticate ownership in a court of law.
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Disadvantages of Quitclaim Deeds
Though they are legally binding and simple, there are many shortcomings of using these deeds. Here are some;
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Not enough security for commercial mortgage lenders; commercial lenders prefer warranty deeds to quitclaim deeds when securing loans for real property acquisition. They require ownership proof that is only provided in the warranty deed.
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No ownership proof; as mentioned above, only warranty deeds provide details of ownership. Quitclaim does not need to include property titles or insurance titles. This can allow somebody to transfer a property they do not own.
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No surety to the descriptions of the property; unlike other deeds, a quitclaim does not guarantee a property is free from problems like tax evasion or claims from other parties. Due to this reason, this deed is not ideal for use when selling property transactions involving money.
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How a Quitclaim Deed Works
Quitclaim deeds can be used on different occasions, especially if the parties know each other perfectly and do not need extra protection. This document can be used under the following conditions;
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- Gifting a property to a family member.
- Transferring an estate into a trust.
- Changing the property to a business.
- Handing over the ownership to an ex-spouse.
- Need a name change on the current deed.
Conclusion
Major investments such as real estate are characterized by inherent risks which can pose legal action, loss of money, or depreciation of assets. While the information provided herein is helpful, use them only for informational, referential, or education purposes.
For comprehensive information on real estate deeds, you can consult a certified financial or real estate expert. You may download a free quit claim deed form online from this website for any states in USA.