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Legal Issues Surround Quitclaim Deeds

Quitclaim deeds are most often utilized to release ownership rights in the context of divorce or inheritance property settlements or to provide a gift. The quitclaim deed only transfers to the grantee (recipient of the deed) whatever title or ownership, if any, that the grantor has at the time the deed is delivered to the grantee. This is the fundamental attribute of the quitclaim deed.
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Senior Scholar, Dean Institute for Corporate Governance and Integrity, Lipscomb University

Senior Scholar, Dean Institute for Corporate Governance and Integrity, Lipscomb University
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There are various types of real estate (land) deeds. Having a deed may document a claim of ownership but does not guarantee actual ownership, as the old jokes about selling or buying the Brooklyn Bridge illustrate. Many types of deeds allow recourse against the grantor (maker of the deed) if certain subsequent title problems occurs. This comment briefly notes in a broad educational overview some legal issues associated with quitclaim (also spelled "quit claim") deeds. Always consult experienced legal counsel in real estate and deed situations.

Quitclaim deeds are most often utilized to release ownership rights in the context of divorce or inheritance property settlements or to provide a gift. The quitclaim deed, sometimes mistakenly called a "quickclaim" deed, only transfers to the grantee (recipient of the deed) whatever title or ownership, if any, that the grantor has at the time the deed is delivered to the grantee. This is the fundamental attribute of the quitclaim deed. It is recognizable by the word "quitclaim" in the document.

Two similar but different deeds should be mentioned. The bargain and sale deed might be used at a government-conducted tax sale. This deed implies appropriate grantor action but makes no warranties against third-party claims to the property. In a grant deed the grantor makes limited warranties concerning the grantor's prior transactions and undisclosed liens.

The following are 10 common things that one should understand.

  1. The quitclaim deed contains no warranties of title or ownership. If the grantor owns nothing, the grantee receives nothing.

  • In a typical real estate purchase, such as buying a home, the buyer should receive a general warranty deed, not a quitclaim deed. Title insurance is also highly desirable and may be required by mortgage lenders.

  • A real estate purchaser under a quitclaim deed is in many legal situations considered to be on notice that the title has defects. Many jurisdictions state that the grantee of a quitclaim deed does not have the legal protections accorded a bona fide purchaser. Typical real estate purchasers should have an experienced professional undertake a title examination based upon public records (often called a title search) and render a title opinion prior to completing the purchase.

  • If one has borrowed money under a real estate mortgage, a quitclaim or other deed to a third party does not release one's liability for the mortgage debt. The lender may release a debt, but a borrower can't avoid payment by unilaterally shifting that debt to a third person. In fact, the terms of the mortgage may prohibit transfers without the consent of the lender. One might mistakenly trigger an acceleration provision in the mortgage, making the entire debt immediately due and payable under penalty of foreclosure. Lenders, as well, need to be cautious when accepting a quitclaim deed from borrowers, such as occurs with a deed in lieu of foreclosure. A deed from the borrower to the lender may operate as a complete release of the debt even if the value of the real estate is less than the outstanding balance of the debt.

  • Subsequent ownership by the grantor after the delivery of a quitclaim deed is not impacted or transferred by the quitclaim deed. For example, A may quitclaim ownership of her grandfather's farm to B. A doesn't own the farm, and B receives no title. Subsequently, A inherits the farm and now owns it. In most states, B still has no title.

  • Recording any deed in the public records at a local courthouse or recorder's office, as determined by state law, only gives public notice of one's claim of ownership. As noted above, a deed does not guarantee actual title or ownership.

  • If two or more individuals are co-owners of real estate, a quitclaim deed by one owner only transfers at best that one owner's ownership rights. If the quitclaim deed requires the signature of all co-owners, the deed is invalid unless all co-owners have signed it and the deed is then delivered to the grantee. However, if the quitclaim deed allows one co-owner to sign it and claims to transfers the entire property to a grantee who takes physical possession of the property, then the deed may create an adverse possession ownership claim to the entire property.

  • If one individual owns real estate and desires to add a co-owner such as a spouse, a quitclaim deed might be used. Consult legal counsel before undertaking this action in order to minimize taxation or inheritance issues.

  • Does the deed only transfer title to the surface of the land? Who will own the subsurface mineral rights? A title examination may be necessary.

  • The substance of a transaction determines if the document in question is a quitclaim deed and not the name or heading on the document. For example, in some situations a letter of intent has been declared by a court to be a quitclaim deed.
    • This brief overview of some of the legal issues surrounding quitclaim deeds is provided for general educational purposes and is not intended to provide legal advice. Always consult an experienced legal professional before engaging in a specific real estate transaction.

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