Quitclaim deeds may be the single most used type of deed for property transfers in the US. This is because of people’s familiarity with the concept of a quitclaim deed as opposed to other deed types. So what are quitclaim deeds so popular? Well, mainly because they are very low risk for the seller/ transferor of the property. When giving someone a quitclaim deed, basically you are saying, “I am not entirely sure how much ownership interest I have or if the title is clean, but whatever is mine is now yours.”
Think of a quitclaim deed as a streamlined way to transfer ownership of property, especially between trusted people.Unlike a typical sale, there are fewer formalities involved. Here are some common situations where they come in handy:
Family Transfers: Moving a house or land to a close relative? A quitclaim deed works well because everyone involved presumably trusts each other. There's no guarantee about the past ownership, but that's okay in this case.
Fixing Title Deed Mistakes: Made a typo on the property title? A quitclaim deed can act like an eraser, correcting the information and ensuring everything is accurate.
Spouses and Property: Getting married? A quitclaim deed can add your spouse's name to the property ownership.Splitting up? This same deed can take your ex-spouse's name off.
Transferring Property to a Trust: Planning for the future? A quitclaim deed can be used to move a property into a trust, which can be helpful for managing your estate.
It's important to remember, however, that quitclaim deeds don't guarantee anything about the property's history or condition. This makes them less desirable for regular real estate sales between strangers, especially if a bank is involved and is financing the transaction.
The impact of bank financing on a quitclaim transaction. If you are planning on receiving a property with a quitclaim deed but plan on using financing to pay for the property, then consider this: your lender may require that some other for of deed is used other than a quit claim deed. This is because a different type of deed, a warranty deed or a limited warranty deed, ultimately offers more protection for the buyer which in turn impacts the bank’s investment. Given that banks have a financial stake in the transaction (they often require to property to be used as collateral and have a lien on the property), then banks may also want more protection over the property in the event they ever have to foreclose.
The bottom line? If you're thinking about using a quitclaim deed to receive property, then remember that property transfer and acquisition is a significant undertaking; therefore, seeking legal counsel is strongly advised. A qualified attorney can assist in selecting the appropriate deed type and ensure a well-executed transaction.
If you have questions or need assistance, sign up for our affordable and efficient deed preparation services and speak with a lawyer about your matter today.
The information provided in this blog is given for educational purposes only and should not be taken as legal advice for your specific matter. Applying the knowledge received here to your legal situation is at your own risk.
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