Although it is a helpful document for transferring property ownership, quitclaim deeds inevitably have several loopholes that you should know about. Here are a few examples of some of the loopholes that you may encounter:
- They do not provide a guarantee of clear title (it may have liens and other claims against it).
- They may not transfer full ownership if the grantor does not have it.
- They may not be valid if signed under the influence or duress, or if they are fraud.
- They may not be sufficient to establish ownership rights in some situations.
These loopholes can cause the quitclaim deed to become worthless or cause confusion regarding the ownership and title of the property. Grantees often challenge this document in court, and the burden of proof becomes showing whether you legally transferred the property and if you (the grantor) had the legal right to transfer it.
Today, we will discuss when to use a quitclaim deed, compare it with a warranty deed, as well as explain some quitclaim deed escape clauses.
When Should You Use a Quitclaim Deed?
When you issue a quitclaim deed to another person, you give up any hold you have of the property. No promises or guarantees are attached to it. Therefore, if you do not hold the title to the property, the grantee does not receive anything. However, quitclaim deeds have a useful role in real estate when you know how to transfer ownership of a property using it.
Quitclaim deeds can be used between two people who know each other well and want to transfer ownership themselves. This agreement often occurs between business partners, family members, or close friends.
Additionally, quitclaim deeds are popular among divorcing couples who want to divide assets. Often, the couple in the divorce process is already aware of the property ownership and does not need to be guaranteed anything or perform a title search.
A title insurance company can also use a quitclaim deed when they find a potential additional owner to a property. In using a quitclaim deed, the company wants to ensure this person will not make a future claim of ownership.
Property Deeds and Titles
Before moving on to the loopholes in quitclaim deeds, let’s review the differences between property deeds and titles first.
You should have a property deed and title when you legally own a property. Understanding the difference between the two will inform your decision when you decide how to transfer the real estate. Most people assume that property deeds and titles refer to the same thing. But they are two separate legal documents.
Mixing the two can cause future challenges during or after transferring a property. To avoid any confusion, the following table outlines the differences between property and titles.
| Property Deeds | Property Titles | |
|---|---|---|
| Legal document | Transfers ownership of property | Establishes ownership and offers a record of ownership transfer |
| Transfers ownership | Yes | No |
| Property's title guarantees | May include guarantees or warranties | No guarantees |
| Signing | Signed by the grantor and grantee and notarized | Not signed by either, and notarization is not required |
| Information available | Property's legal description and parties involved in the transfer | Property's description, ownership history, and any liens and claims on the property and |
Warranty Deed Vs. Quitclaim Deed
While there are various types of deeds to transfer property ownership, the warranty deed and quitclaim deed are the most popular. They are similar in that they help transfer property, but they have significant differences.
For example, a warranty deed provides an assurance of a clear title and offers protection for the buyer. In contrast, the quitclaim deed provides no guarantee of ownership and is used in limited circumstances. Below are other differences between a warranty deed and a quitclaim deed.
| Warranty Deed | Quitclaim Deed |
|---|---|
| Guarantees seller holds a clear title and has the right to sell | No guarantee of a clear title, but only transfers the interest in the property |
| The buyer may have legal grounds against the seller if there is a problem with the title | The buyer is responsible for any issues that arise with the title |
| Highest level of buyer protection | The lowest level of buyer protection |
Quitclaim Deed Escape Clauses
Grantors include quitclaim deed escape clauses to safeguard the grantor's interests and limit their liability. It also helps to ensure the transfer of real property is smooth and secure for both parties. These escape clauses that unearth the various loopholes are as follows:
- No warranty clause: It states that the grantor makes no guarantees or warranties about the condition of the property and the title. This clause opens a loophole that does not assure a clear title.
- Grantee's assumption of risk clause: This statement places the sole responsibility of investigating the condition of property and title on the grantee. Further, they assume all the risks involved with the property. The loophole associated is the lack of assurance that the property has no pending claims.
- Conditional limitation clause: This clause adds limitations on the grantee's ownership of the real property. For example, the grantor may require the grantee to use the property for a particular purpose. The loophole here is that the quitclaim deed dictates the extent you can use the property.
- Reversion clause: If the buyer fails to honor certain conditions, this clause allows the seller to reclaim the property. In this situation, the grantee's options are limited, creating a loophole they should be willing to accept.
- Merger clause: If there were previous agreements before the quitclaim deed, this clause nullifies their validity, and the current deed is considered the entire agreement between the two parties. The grantee must be willing to accept this loophole that blocks any other agreements in case of a problem.
Although quitclaim deeds can have multiple loopholes that both parties should be willing to accept, they offer a quick and legal way to transfer property ownership. It is important to ensure you execute it properly and use the necessary escape clauses.
Start your Quickclaim Deed now
Helpful Resources:
Feldman Law - The Differences Between Quitclaim Deeds and Warranty Deeds
Trust and Will - Quit Claim Deed Loopholes: How to Avoid Probate
Cornell Law - Quitclaim Deed
Although it is a helpful document for transferring property ownership, quitclaim deeds inevitably have several loopholes that you should know about. Here are a few examples of some of the loopholes that you may encounter:
- They do not provide a guarantee of clear title (it may have liens and other claims against it).
- They may not transfer full ownership if the grantor does not have it.
- They may not be valid if signed under the influence or duress, or if they are fraud.
- They may not be sufficient to establish ownership rights in some situations.
These loopholes can cause the quitclaim deed to become worthless or cause confusion regarding the ownership and title of the property. Grantees often challenge this document in court, and the burden of proof becomes showing whether you legally transferred the property and if you (the grantor) had the legal right to transfer it.
Today, we will discuss when to use a quitclaim deed, compare it with a warranty deed, as well as explain some quitclaim deed escape clauses.
When Should You Use a Quitclaim Deed?
When you issue a quitclaim deed to another person, you give up any hold you have of the property. No promises or guarantees are attached to it. Therefore, if you do not hold the title to the property, the grantee does not receive anything. However, quitclaim deeds have a useful role in real estate when you know how to transfer ownership of a property using it.
Quitclaim deeds can be used between two people who know each other well and want to transfer ownership themselves. This agreement often occurs between business partners, family members, or close friends.
Additionally, quitclaim deeds are popular among divorcing couples who want to divide assets. Often, the couple in the divorce process is already aware of the property ownership and does not need to be guaranteed anything or perform a title search.
A title insurance company can also use a quitclaim deed when they find a potential additional owner to a property. In using a quitclaim deed, the company wants to ensure this person will not make a future claim of ownership.
Property Deeds and Titles
Before moving on to the loopholes in quitclaim deeds, let’s review the differences between property deeds and titles first.
You should have a property deed and title when you legally own a property. Understanding the difference between the two will inform your decision when you decide how to transfer the real estate. Most people assume that property deeds and titles refer to the same thing. But they are two separate legal documents.
Mixing the two can cause future challenges during or after transferring a property. To avoid any confusion, the following table outlines the differences between property and titles.
| Property Deeds | Property Titles | |
|---|---|---|
| Legal document | Transfers ownership of property | Establishes ownership and offers a record of ownership transfer |
| Transfers ownership | Yes | No |
| Property's title guarantees | May include guarantees or warranties | No guarantees |
| Signing | Signed by the grantor and grantee and notarized | Not signed by either, and notarization is not required |
| Information available | Property's legal description and parties involved in the transfer | Property's description, ownership history, and any liens and claims on the property and |
Warranty Deed Vs. Quitclaim Deed
While there are various types of deeds to transfer property ownership, the warranty deed and quitclaim deed are the most popular. They are similar in that they help transfer property, but they have significant differences.
For example, a warranty deed provides an assurance of a clear title and offers protection for the buyer. In contrast, the quitclaim deed provides no guarantee of ownership and is used in limited circumstances. Below are other differences between a warranty deed and a quitclaim deed.
| Warranty Deed | Quitclaim Deed |
|---|---|
| Guarantees seller holds a clear title and has the right to sell | No guarantee of a clear title, but only transfers the interest in the property |
| The buyer may have legal grounds against the seller if there is a problem with the title | The buyer is responsible for any issues that arise with the title |
| Highest level of buyer protection | The lowest level of buyer protection |
Quitclaim Deed Escape Clauses
Grantors include quitclaim deed escape clauses to safeguard the grantor's interests and limit their liability. It also helps to ensure the transfer of real property is smooth and secure for both parties. These escape clauses that unearth the various loopholes are as follows:
- No warranty clause: It states that the grantor makes no guarantees or warranties about the condition of the property and the title. This clause opens a loophole that does not assure a clear title.
- Grantee's assumption of risk clause: This statement places the sole responsibility of investigating the condition of property and title on the grantee. Further, they assume all the risks involved with the property. The loophole associated is the lack of assurance that the property has no pending claims.
- Conditional limitation clause: This clause adds limitations on the grantee's ownership of the real property. For example, the grantor may require the grantee to use the property for a particular purpose. The loophole here is that the quitclaim deed dictates the extent you can use the property.
- Reversion clause: If the buyer fails to honor certain conditions, this clause allows the seller to reclaim the property. In this situation, the grantee's options are limited, creating a loophole they should be willing to accept.
- Merger clause: If there were previous agreements before the quitclaim deed, this clause nullifies their validity, and the current deed is considered the entire agreement between the two parties. The grantee must be willing to accept this loophole that blocks any other agreements in case of a problem.
Although quitclaim deeds can have multiple loopholes that both parties should be willing to accept, they offer a quick and legal way to transfer property ownership. It is important to ensure you execute it properly and use the necessary escape clauses.
Start your Quickclaim Deed now
Helpful Resources:
Feldman Law - The Differences Between Quitclaim Deeds and Warranty Deeds
Trust and Will - Quit Claim Deed Loopholes: How to Avoid Probate
Cornell Law - Quitclaim Deed
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