Buying a house or gifting property to family? The deed you choose is critical. Learn which legal document safeguards your investment and when to use each. Protect your biggest investment by understanding the crucial difference before you transfer any property.
When it comes to property transactions, the terms “quitclaim deed” and “warranty deed” often come up. They might sound like legal jargon, but they are actually simple once you understand them. Whether you are transferring property or buying your dream home, knowing the difference between these two types of deeds can save you time, money, and headaches.
However, we won’t overwhelm you with legal terms. Instead, we’ll explain everything you need to know clearly and engagingly. Now, let’s dive into the details of quitclaim deeds and warranty deeds to see which one fits your needs best.
What is a quit claim deed?
A quitclaim deed is a legal document used to transfer ownership interest in a property. However, unlike other deeds, a quitclaim deed offers very few guarantees. It transfers whatever interest the grantor, the person transferring the property, has in the property, but it makes no promises about the validity of those rights. The person receiving the property, the grantee, takes on all the risks and accepts the deed as-is, without any assurance that the grantor actually has full ownership.
Here’s the key point: a quitclaim deed does not guarantee that the property is free of claims or issues. The grantor might not even own the property, or they might only own part of it. So, if you’re the recipient, it’s important to know exactly what you’re getting into.
When is a quit claim deed used?
Quitclaim deeds are commonly used when the parties trust each other or when the transaction does not need any warranties or guarantees. Here are some typical situations where quitclaim deeds are used:
- Transfers between family members: For instance, a parent might transfer property to a child, or a family member may transfer property as part of an estate plan.
- Divorce settlements: After a divorce, one spouse may use a quitclaim deed to transfer their share of the property to the other spouse.
- Title clarification: If there is confusion about ownership or if there was an error in the property title, a quitclaim deed can clarify who owns what.
- Transferring property into a trust: If you are creating a trust, you might use a quitclaim deed to transfer property into the trust, especially if you already own the property.
What is a warranty deed?
In contrast to a quitclaim deed, a warranty deed is a stronger and more secure legal document. This type of deed guarantees that the grantor owns the property and has the legal right to transfer it. A warranty deed also assures the grantee that the property is free from any liens or claims. The grantor will defend the grantee’s title against any future claims.
There are two main types of warranty deeds:
General warranty deed
This is the most complete type of warranty deed. It guarantees that the grantor holds clear title to the property and covers the entire history of the property. If there’s an issue with the title that goes back to previous owners, the grantor is responsible for fixing it. If the grantee faces any legal problems concerning the property, the grantor will need to defend the title.
Special warranty deed
This deed offers a more limited guarantee. It only covers the period when the grantor owned the property. If any issues arise from before the grantor’s ownership, the grantor won’t be responsible. This type of deed is often used in commercial real estate transactions and may be preferred by sellers who want to limit their liability.
When is a warranty deed used?
Warranty deeds are mainly used in property sales, particularly when buying a house or land. These deeds give buyers confidence because they assure ownership and promise that the property is free from legal disputes. Mortgage lenders often require a warranty deed to protect themselves from title issues.
Warranty deeds are typically used when:
- Buying or selling property: When transferring ownership of a home, land, or any other real estate, a warranty deed protects the buyer and offers assurance.
- Establishing clear title: If you’re buying a property, a warranty deed guarantees that the seller owns it entirely and that no one else can claim it.
- Commercial transactions: Special warranty deeds are frequently used in commercial real estate to ensure that the property is free of claims only during the seller’s ownership.
Quit claim deed vs. warranty deed: The key differences
Now that we know what each deed involves, let’s examine the main differences between a quitclaim deed and a warranty deed:
Level of protection:
- Quitclaim Deed: Offers no protection for the grantee. The grantor does not make any promises about the validity of their ownership or whether the property is free of claims.
- Warranty Deed: Provides a high level of protection. The grantor guarantees that they own the property and that it is free from any legal issues.
Risk:
- Quitclaim Deed: The grantee takes on the full risk. If the grantor does not actually own the property or if there are hidden claims, the grantee gets nothing.
- Warranty Deed: The risk lies with the grantor. If any title issues arise, the grantor is responsible for resolving them.
Use cases:
- Quitclaim Deed: Best for transfers between family members, estate planning, or in situations where the parties already trust each other.
- Warranty Deed: Best for property sales, particularly when buying or selling a home. It is commonly used in most real estate transactions because it gives the grantee security.
Cost:
- Quitclaim Deed: Generally cheaper because it does not require a title search or title insurance.
- Warranty Deed: Can be more expensive, especially when title searches and title insurance are necessary. The higher cost reflects the greater level of protection it provides.
Legal responsibility:
- Quitclaim Deed: The grantor has no legal responsibility to defend the title.
- Warranty Deed: The grantor is legally responsible for defending the title against any future claims or legal disputes.
Which one should you choose?
The choice between a quitclaim deed and a warranty deed depends on the type of transaction and the trust level between the parties.
If you’re buying a property or involved in a real estate deal where ownership must be clear, a warranty deed is the best option. It gives both parties security and peace of mind.
If you’re just transferring property between family members or adding a spouse to a title, a quitclaim deed may work. It’s a cheap, straightforward choice, but keep in mind that it carries the risk that the grantor might not actually own the property or have a clear title.
Final thoughts
Both quitclaim deeds and warranty deeds play important roles in property transactions, but they do so in different ways. A quitclaim deed is simple and quick; it is often used for informal transfers. In contrast, a warranty deed provides a much stronger level of protection, making it the best choice for real estate transactions.
When in doubt, especially during a property sale or purchase, always choose a warranty deed. It’s better to be safe than sorry. However, if you’re just transferring ownership between family members or resolving a title issue, a quitclaim deed can work. Just make sure you fully understand the risks before moving forward.
Disclaimer: This article is intended for general information and educational purposes only and should not be taken as legal or financial advice. Property laws vary by region, and circumstances can differ greatly from case to case. Always consult a qualified legal professional, solicitor, or property adviser before making any decisions regarding deeds, property transfers, or real estate transactions.
Himani Verma is a seasoned content writer and SEO expert, with experience in digital media. She has held various senior writing positions at enterprises like CloudTDMS (Synthetic Data Factory), Barrownz Group, and ATZA. Himani has also been Editorial Writer at Hindustan Time, a leading Indian English language news platform. She excels in content creation, proofreading, and editing, ensuring that every piece is polished and impactful. Her expertise in crafting SEO-friendly content for multiple verticals of businesses, including technology, healthcare, finance, sports, innovation, and more.
