-Buying residential real estate involves signing paperwork to close the transaction. One of the vital documents is a property deed that transfers ownership rights from the previous owner to the new owner.
A quit claim deed is a common type of deed in the real estate sector. Although it facilitates a faster and easier transaction, it has a fair share of complexities. Experts, therefore, recommend using the deed under exceptional circumstances.
Discover why you shouldn’t accept a quit claim deed when buying a residential estate.
What’s a Quit Claim Deed?
A quit claim deed is a legal document that transfers ownership rights of a real estate property from a grantor to the grantee. It, therefore, conveys the seller’s rights to the buyer but is subject to applicable liens of records.
How Does a Quit Claim Deed Work?
A quit claim deed originates from the grantor. Typically, the seller will fill out the deed, highlighting the property’s legal description, the parties’ names and addresses, and the effective transfer date. The grantor will then sign the deed in the presence of a notary public, and upon verification, the grantee will receive a signed deed.
The grantee assumes ownership of the property provided the deed has a valid signature from the notary public, a stamp from the local municipality, and a copy is filed at the County recorder’s office.
Drawbacks of a Quit Claim Deed
Quit claim deeds are legally binding but offer limited protection and often expose the buyers to significant risks. Potential drawbacks include:
- a) Limited Protection
- b) Costly Legal Disputes
- c) No Promise or Warranty
The deed is usually subject to liens of record. It, therefore, offers limited protection from any claims to the property after closing the deal. For this reason, it is not appropriate to buy a permanent residence.
The legal deed may be prone to disputes, especially if the grantor doesn’t provide proof of ownership. With limited legal protection, you may incur costly expenses in legal disputes or sometimes lose the property.
A quit deed claim offers no warranty or promise of the quality of the title. If the grantor has no legal interest in the property, the grantee can’t acquire or claim any right of warranty against the seller.
Moreover, the deed only transfers what the grantor owns. For instance, if two people own property under a joint agreement and one party forfeits his interest, the buyer can only receive half of the property ownership rights.
Do You Need a Quit Claim?
Quit claim deeds are relatively common in real estate transactions that don’t require a monetary exchange. However, they’re efficient for property transfers where the grantor and the grantee know each other and can accept the associated risks. Such transactions include:
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Property transfer to close family members.
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Incorporating your spouse’s name into a property.
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Property transfer after a divorce.
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Mortgage refinancing.
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A property transfer between business partners.
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Draft Your Quit Claim Today
A quit claim deed offers an easy and cost-effective way of transferring property ownership. However, it has limited protection and offers no warranty to the title. Therefore, you should consult a legal expert before using the deed to buy real estate property. Are you ready to create a quit claim? Download a free printable template from our website today