Understanding a Quit Claim Deed
If you take a look at the words inside the question “What Is a Quit Claim Deed?” then it becomes easy to figure out what it means. The person filing the quit claim (known as the grantor) is transferring the deed to a property to a different person or to an estate (known as the grantee). The purpose of the quit claim is to allow the grantor to quit, or abandon, all claims or interests in that property. This is less commonly used than the warranty deed, which represents a legal guarantee made by the grantor to the grantee that the property will have a clear title. The risk with using a quit claim is that no such guarantee comes with the paperwork.
What is a quit claim deed used for
Quit claim deeds are handy when family members are transferring property to one another. Because they (hopefully) have a relationship based on trust with one another, they don’t need the guarantee that comes with a warranty deed. Also, if you are transferring property to someone else as part of a gift, a quit claim deed is simpler to use than a warranty deed. If you own property and want to transfer it to a business that you own, a quit claim gives you a simple way to do that as well. In some situations, quit claims work to get rid of encumbrances or other issues that can keep people from being able to claim a title.
If you are going through a divorce and one of you is receiving sole possession of property that you both had owned jointly during the marriage, a quit claim deed is a common instrument used to assign the property to its new status. Consider the example of a husband using a quit claim to surrender his interest completely to his wife; at that time, the wife would be responsible for any and all obligations that might be connected to that property. In some situations that involve blending of responsibilities, you can attach codicils to the quit claim deed that will outline everything specifically.
For people who are not involved in transactions involving family members or the assignment of formerly jointly held property to one spouse, a warranty deed is preferable to a quit claim. A grantor who uses a warranty deed ends up with a much more secure sense of having sent a clean title to the grantee, and the warranty deed implies a promise by the grantor that they are in fact the owners of the property in question and that they have the right to make the transfer. Also, the warranty deed indicates that the title has no third party legal claims or other liens associated with it. Finally, the warranty deed includes a promise from the grantor to support the grantee’s rights to ownership completely.
There is one misconception regarding quit claims that many people are not aware of. Some people have used quit claims to attempt to transfer property away from themselves before their creditors find out that they own the property. There are instances in the past in which creditors have been able to have those quit claims reversed after the fact. Also, if you issue a quit claim in this situation but other lienholders or a lender might still have a right to claim that property, things can go quite poorly for the grantee. It takes some time and effort to clear up issues with regard to a title, and it can end up costing some money as well. If you do not know the person who wants to issue a quit claim policy, it is worth getting title insurance through a title company so that you will have protection. That way, if you purchase a property through a quit claim, you do not end up with nothing. The title insurance gives you the right to get your money back in the instance of a blocked title.
Quit Claim Deed Forms
If you have questions about quit claim deed form or any of the other associated paperwork with your real estate transaction, and you have not yet hired a realtor or retained an attorney, Amansad Financial can answer basic questions about the functions of different instruments within your closing documents. We cannot give legal advice about your own situation but can refer you to a qualified real estate attorney in your part of western Canada.