A deed transfers ownership of property from one party to another. There are two basic kinds of deeds: warranty and quitclaim. Both give a legal description of the property and the names of the individual transferring it and the person who’s accepting it. But that’s where the similarity ends. Quitclaim deeds provide far less protection to the person receiving the property.
Quitclaim Doesn't Promise Clear Title
Unlike a warranty deed, a quitclaim deed makes no representations that the property is free of liens or other claims. Because a title search is not performed when property is transferred by this type of deed, problems may not come to light. The person receiving the property might discover months or years later that the real estate is encumbered by a tax lien or that a utility company has the right to use a part of the property. No title search means there's no title insurance, so the person receiving the property is left vulnerable to claims. The person transferring the property is under no obligation to disclose the existence of the liens or claims he knows about.
Signer Doesn't Guarantee Ownership
A quitclaim deed states that the property owner is quitting his ownership of the property if he actually has any ownership in it to quit. The deed effectively says, “I’m giving my interest in this property to you,” but it doesn’t guarantee that the signer has any interest to give. If he does have an interest, the deed doesn't specify how much of an interest it is. He could sell his home one month, then sign a quitclaim deed the next month transferring ownership to a separate third party. The person he transferred the property to via quitclaim deed would receive nothing because the owner had already sold his ownership interest in the real estate to someone else.
Family Members Often Use Quitclaims
Considering the drawbacks, it may seem like no one would ever want to accept property that’s conveyed by quitclaim deed, but these documents do have their uses. They’re rarely used when property is sold, but if it’s being passed between spouses or other family members, using a quitclaim deed should suffice. These people typically know or can feel reasonably comfortable that the person transferring the property has an ownership interest to give. For example, if the property is transferring from joint names to one spouse’s name due to divorce, the receiving spouse knows that the other has an ownership interest and is probably aware of any liens.
Owner Still Responsible for Mortgage
Just as when other liens exist against a property, a quitclaim deed doesn’t erase or affect an existing mortgage. If the mortgage is in the name of the person who signed over the property, he remains liable for the debt even after he transfers ownership to someone else. The person receiving the property has ownership but no responsibility for the mortgage.
Beverly Bird has been writing professionally for over 30 years. She is also a paralegal, specializing in areas of personal finance, bankruptcy and estate law. She writes as the tax expert for The Balance.