A Brief Introduction About the Quitclaim Deed
A quitclaim deed is a legal document that is used to transfer an interest in a particular property to another person. Once the deed is executed, the interest that the person had in the property is transferred to the other party. The owner, i.e., the person who is transferring the interest, thereby gives up any claim or right and interest in the property and transfers such rights to the recipient.
A major difference between other property deeds and a quitclaim deed is that in such a deed, the recipient will only receive the interest that the owner actually possesses at the time of transfer. There is no warranty given to the recipient as the status of the property title. This means that there is no guarantee that the owner actually possesses any actual interest in the property at the time of transferring it, or even if he does, there is no guarantee that such interest is clear. Hence, it is possible that the recipient may not actually receive any interest in such property, and he also has no legal recourse as there is no warranty in a quitclaim deed.
These deeds are also known as ‘deeds of release’ or ‘quick claim deeds.’
Who Take the Quitclaim Deed?- People Involved
The people involved in a quitclaim deed are the person who is transferring the interest in the property (known as the grantor) and the person who is receiving such interest in the property (known as the grantee). This deed is generally entered into between family members.
Purpose of the Quitclaim Deed-Why Do You Need It?
The purpose of a quitclaim deed is to transfer interest in a property to another person. This is a relatively faster way to transfer interest compared to any other method. However, as mentioned above, there is no warranty as to the interest that the grantee will receive in the property. This is the reason this deed is not considered suitable while purchasing a property from an unknown person. Hence this deed is mostly used to transfer interest in a property to a family member.
This kind of deed may be used at the time of divorce when one spouse gives up any interest in a jointly-held property, and hence, the other spouse receives full rights to that particular property. Such a deed may also be used when a person wishes to transfer property to a trust.
This deed is quite useful when a property has to be transferred to family members in a quick manner without entering into too many formalities. The deed ensures that the interest is transferred to the grantee as soon as the deed is executed. It can also be used to transfer property interest to a business partner or to bequeath property to someone in a will upon the death of the grantor.
Contents of the Quitclaim Deed
A quitclaim deed must contain the following elements to make it valid:
- The beginning of the deed must state that it is a quitclaim deed and that property is being transferred through quitclaim.
- Identity of the grantor: The name and address of the grantor should be mentioned. The grantor may be an individual, a company, a partnership, a trust, or any person who can legally hold real estate.
- Identity of the grantee: The name and address of the grantee should be mentioned. The grantee may be an individual, a company, a partnership, a trust, or any person who can legally hold real estate.
- The date on which the deed is executed must also be mentioned.
- Consideration: The deed must mention what consideration the grantee is giving to the grantor in exchange for the interest. This deed may also be in the form of a gift without any consideration.
- Description of the property: The legal description of the property in which the interest is being transferred must be mentioned. This must include the physical address of the party and the land parcel number.
- Signatures: The grantor must sign the deed. In some cases, it may also have to be signed by witnesses.
- Preparer: There also must be a clause stating who has prepared the deed. This person may be the grantor or a lawyer on his behalf.
How to Draft the Quitclaim Deed?
The following are the steps to follow while drafting a quitclaim deed:
- A quitclaim deed should be drafted containing all the clauses, as mentioned above. Care must be taken that all relevant details are included to make the deed valid.
- The deed must be signed by the grantor. In some cases, the grantee is also required to sign the deed.
- The deed must be delivered to the grantee and accepted by him. This is necessary for the deed to be considered valid. It is advisable to get a statement in writing from the grantee stating that he has received and accepted the deed.
- The deed should be notarized as well to increase its validity.
- The deed should be recorded at the recorder’s office where the property is located.
Benefits and Drawbacks of the Quitclaim Deed
The following are the benefits and drawbacks of entering into a quitclaim deed:
- A benefit of the quitclaim deed is that it is a speedy way to transfer interest in a property. It is the easiest option when a property has to be transferred to family members.
- Another benefit of this deed is that it transfers only ownership of the property and not any lien or mortgage. Thus the only grantee will not be responsible for any payment owed on the property, and only the grantor is responsible for the same.
- If the property is transferred as a gift, the parties may be liable for a tax exemption.
- A major drawback is that the grantor does not provide any guarantee that he actually has an interest in the property that he was transferring. Hence there is no assurance that the grantee will receive any interest at the time of the transfer.
- If the grantee receives no interest in the property, he has no legal recourse as the quitclaim deed does not cover any warranty. This lack of warranty makes this deed an unsuitable option while purchasing a property from an unknown person.
- Even if the grantor has a title to the property, it is possible that the title is not clear, and there is some encumbrance attached to it. Again even, in this case, the grantee does not have any legal recourse.
What Happens in Case of Violation?
As has been mentioned before, there might be a circumstance where the grantor has no interest in the property that he wishes, or there might be a case where even though the grantor has a certain interest in the property, such interest is not clear, or there are certain encumbrances attached to it. In such cases, the grantee will either receive no interest at all or will receive an interest that is not free of encumbrances(1).
However, there is no legal recourse available to the grantee in such circumstances. This is because, in the quitclaim deed, there is no guarantee given by the grantor as to his interest in the property. He does not give an assurance that he has a certain interest.
Hence as there is no warranty, the grantee does not have any legal basis for enforcing any interest that should have accrued to him. He will only receive any interest that the grantor has at the time of creating the quitclaim deed, if any. In the absence of any such interest, the grantee will be liable to receive nothing. This is the reason why this deed is only used for transferring property to family members or to a trust. In case of purchase of property from an unknown person, other property deeds that provide a guarantee of the title of the grantor should be used.
[Also Read: Transfer of Ownership Agreement ]
In conclusion, a quitclaim deed is a fast method for property transfer between family members. As soon as the deed is executed, the interest in the property is transferred from the grantor to the grantee. It can also be used to add or remove a person’s name from the title of a particular property. It is a very easy deed to draft and execute.
As there is no need to provide a guarantee as to the title of the grantor, the legal formalities associated with this deed are also less. A grantor can prepare this deed on his own without the assistance of a lawyer. There are quitclaim deed forms available that need to be filled up with the important details.
It is a beneficial deed for transferring property from a company to a subsidiary or a gift a property to a known person. In case of a gift, the parties will also be liable for a tax exemption. Hence this deed is very cost-effective and also saves the time of the parties. If used in the correct circumstances, the deed is a practical alternative to the other property deeds that are usually used.