In the world of real estate, the contract is king and there are a lot of kings to keep track of. One of the most misunderstood types of agreements in real estate law is the quitclaim deed. While you may have heard of a quitclaim deed, there is a good chance that you do not understand what it does and what it is for. Before you start demanding that your attorney draft a quitclaim deed, you should spend some time researching whether or not you really need one.
What is a Quitclaim Deed?
A quitclaim deed is a document that can transfer ownership from one party to the next, but it is not used during a real estate sale. It is most commonly used when:
- Property is transferred to a loved one as part of a will after the property owner passes away
- One spouse wants to add the other to the deed to claim partial ownership of the property
- A couple divorces and the property owner wants to remove their former spouse from the property deed
What is the Difference Between a Deed and a Sales Contract?
The deed transfers ownership of the land to another party as part of a legal process. A sales contract transfers ownership of the land and its contents to a new owner after a legal transaction. The deed and the sales contract often work hand-in-hand. The sales contract is the promise to transfer ownership of a property after some type of transaction is finalized, and the deed is the actual transfer.
What is a Warranty Deed?
There are two common types of deeds; quitclaim and warranty. The warranty deed is the one that is used to transfer ownership of a property after a transaction has taken place, and a quitclaim deed transfers ownership of a property without the need for a transaction. When you buy a house, you get a warranty deed. When you add or remove your spouse from the title to the property, you use a quitclaim deed.
Deeds Can Be Complicated
Title insurance companies and attorneys use deeds to determine property ownership, and liability during property disputes. When it comes to determining which type of deed is appropriate in which situation, that is something best left to an attorney. While there are concrete rules surrounding the use of each type of deed, sometimes those rules get gray when they are applied. That is why it is always best to have an attorney handle the deed process to any property issue.
Instances Where A Quitclaim Deed Is Used
As we mentioned, a quitclaim deed is used to transfer property from party to the next, such as when a property owner passes on and the property ownership is transferred to next of kin. Other instances where quitclaim deeds become important include:
- Partnership disputes
- Estate planning
If you feel like you need to address an ownership issue with your property, then it is time to talk to an attorney about a quitclaim deed. In many instances, a quitclaim deed can ensure that your family property stays within the family if something should ever happen to you.