When property is transferred from one party to another, this changing of the hands can happen through a few ways which include a sale, a gift, or a court order. If your matter in connection to a property transfer is nontraditional because of a gift or court order, the quit claim deed is typically the preferred vehicle to use.
Here are some examples of when a Quit Claim Deed may be necessary:
-Parents transferring a home to their children
-After a marriage, when one spouse would like to add their wife/husband onto the title for a property which was owned prior to marriage
-During a divorce where one spouse will acquire a property fully and remove the previous spouse from the title
-When property is transferred into a living trust or what is sometimes referred to as a revocable trust
What Exactly is a Quitclaim Deed?
A quitclaim (also spelled quit claim) deed is a legal document that transfers the title of a property to another party. Be mindful that no assurances are made about the owner’s title. During a traditional sale of a home, a warranty deed is used. With a warranty deed, a deed considered to be one of the strongest and most secure since it is used in regular home sales, guarantees that the property being sold is free of all liens, encumbrances, and any other title holders. With a quitclaim deed, no guarantees are made. Only what the original owner actually had an interest in is transferred.
As an example, my wife and I own a property but one day I decide to quitclaim my interest to my cousin. My cousin is the sole owner of my interest, not my wifes. I am considered the grantor in this example. My cousin, who is receiving the title, is considered the grantee. As the grantor, if I had no interest whatsoever in the property, my cousin does not have title.
Assuming my cousin is now holding title of the property, this has no bearing on the mortgage. If my name was initially on the mortgage, I am still obligated to make the monthly payments. A mortgage is a separate matter altogether that is not covered by a quitclaim deed. Only the title is affected.
What are the benefits of a quitclaim deed?
As you read through what a quitclaim deed is, you have to ask yourself what are the benefits of this type of deed? Considering that there are no guarantees on the title, why even move forward with a quitclaim deed? Here are 6 reasons why a quitclaim deed may be right for you:
-It is a very fast and simple process in which no title search is made. Also, no title insurance is needed.
-This is an expedited way to receive ownership of a property.
-This is a tax saving tool since no money is attached to the sale.
-As the grantee, you are only given the title of a property. You are not responsible for any liens or mortgage balances.
-This deed is useful in divorce matters since no income tax needs to be paid by the grantor if a particular property is part of a settlement.
-You can avoid the probate process. With the probate process, you may be subject to months of waiting and high legal fees in order to transfer title to the designated beneficiaries in a last will and testament.
Conclusion
A quitclaim deed is never used in a typical sale of a home but does have some benefits for unique situations as noted previously. If you are interested in transferring title to another party or want to know more about the various types of deeds used in the real estate industry, feel free to contact our law firm at (917) 567-1963 or email us at RRozhik@RozhikLawFirm.com.