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Understanding the Quit Claim Deed and When it is UsedUnderstanding the Quit Claim Deed and When it is Used

Understanding the Quit Claim Deed and When it is Used

12 Oct 2020

There may come a time when you want to transfer the title to your property—i.e. the legal ownership rights—to someone else. A Quit Claim Deed is one of several legal instruments that can used for this purpose, but it is critical that you understand how it works, when to use it, and how to ensure it is properly drafted and executed.

 

A Quick Guide to Deeds

 

A deed is a legal document that “conveys”, or transfers, real estate from one party (the Grantor) to another (the Grantee). Virtually any time that you acquire a property—whether as a buyer, heir, or spouse—you will need a deed signed by the owner that legally transfers the title from the previous owner to you. This deed will also need to be recorded in the public records of the county in which the property is situated.

 

Quit Claim vs. Warranty Deed

 

Along with the Quit Claim Deed, the Warranty Deed is one of the two main types of deed, although it is better known since it is used in most real estate transactions. Although you might think you own a property once you have paid the sales price, it is only when the deed is properly executed that you can be said to legally own the property. Think of the purchase contract as a promise by the seller to convey the property once you fulfill your obligations, while the deed is the conveyance itself

 

A Warranty Deed is named so because it is a warranty (or guaranty) from the seller that the property is free and clear of any problems with the title, such as unresolved claims or liens that will otherwise attach to the title and become your problem to bear once it passes. A Warranty Deed also states that the grantor is the rightful owner of the property and has the right to transfer the title. If any problems should arise contrary to the promises of the Warranty Deed, you can seek to hold the grantor liable to resolve the issue.

 

By contrast, a Quit Claim Deed makes no such guarantee that the grantor has full ownership of the subject property or that the property is free and clear of liens, thereby shielding the grantor from any liability. This means there will be no legal recourse if a title issue emerges or an outstanding claim is revealed. Hence a Quit Claim Deed is far riskier than a Warranty Deed, which is why it is rarely utilized in traditional, arm’s length real estate transactions.

What is a Quit Claim Deed Good For?

The inherent riskiness of a Quit Claim Deed is why it is often executed between family members or among related business entities. The following scenarios are the most common and preferred instances to consider using a Quit Claim Deed:

 

  • The owner is transferring the property to their living trust or a company
  • The owner is adding their spouse’s name to the title
  • An ex-spouse is removed from title as part of a divorce settlement
  • The owner is uncertain of his or her legal ownership
  • The owner wishes to transfer title to a relative before the owner’s death

 

In any of the above-listed example, you must still ensure that the Quit Claim Deed is properly drafted. The legal description of the property—which includes the location, boundaries and specific identifiers—must be accurate. The names of the grantor and grantee must also be accurate, or else there could be ambiguity and a potential dispute over who owns the property. The grantor’s marital status should also be stated as well as non-homestead language (if applicable).

 

How Marina Title Can Help

 

Given the inherent risks of a Quit Claim Deed, you should reduce any further potential consequences by turning to title experts who understand the complexities of title documents and Florida real estate law.

 

Let us handle these matters and help mitigate errors and liabilities to protect your interests. Contact us at (305) 901-5628 or info@marinatitle.com to learn more about our deed preparation services or to schedule a free initial consultation.

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