A deed is a legal document that substantiates an individual’s right to the title of a specific piece of property or real estate. Deeds are commonly used in the process of buying and selling real estate to secure and transfer title to a property. There are numerous types of deeds that are used to perform the various types of tasks required when transferring title of a property, including deeds of trust and warranty deeds, which serve to guarantee that a property’s title is free of all encumbrances. One form of deed that is commonly used but somewhat misunderstood is the quit claim deed.
The quit claim deed is used to transfer any ownership claim or interest an individual might have in a piece of property to another person or entity. As this definition makes explicit, the difference between a quit claim deed and a warranty deed is that the quit claim does not guarantee the status of the title as to whether or not there are any encumbrances on it. Warranty deeds guarantee that the property title is free of any and all encumbrances or claims that can be made against the property. The seller is also personally guaranteeing the buyer against any future possibility of claims against the property.
Quit claim deeds make no such guarantees. Therefore, it is frequently used in situations where there is a measured degree of trust between the person transferring the title and the person receiving it. The quit claim deed is most frequently used to transfer ownership of property between family members where there is direct knowledge as to the condition of the title. When a trust maker transfers property into a revocable living trust, it is often accomplished through the use of a quit claim deed. Quit claim deeds are also frequently used by corporations to transfer property holdings from one entity to another for legal or tax purposes.
As the quit claim deed does not guarantee the status of a property’s title, it is rarely used to administer a sale of property that requires the use of a mortgage. Instead, mortgages require the use of a deed of trust that transfers legal title of a property to a trustee that holds it on behalf of the lender until the mortgage is repaid.
A quit claim deed is most frequently used in the absence of a mortgage. However, it can be used to secure title to a property when a promissory note is executed between family members or trusted individuals. The quit claim deed simplifies the process of transferring title to a property from one individual to another where there are no requirements for verifying the clarity of the title.
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